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4 min read Published October 11, 2022
Written by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the details of taking out loans to buy a car.







Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to manage their finances by providing clear, well-researched information that break down complex topics into manageable bites.









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For many, it is an affordable way to get behind the wheel of an all-new vehicle. Leasing comes with lower monthly payments and eliminates many of the other costs associated with car ownership -for example, repairs, which the dealer generally covers. But to take advantage of the lower costs associated with leasing, you have to qualify. A car lease with bad credit can be more difficult. What is the credit score you need to lease the car? When you're looking for a lease on a vehicle, your score on credit is an important element. Dealers prefer customers with excellent credit scores with higher interest rates . However, should you have a poor credit score, they may not lend to you at all. The credit score needed to lease a car varies from dealership to dealership. A prime score ranges from 661 to 780. Prime scores make up 65 percent of total financing, as per an Experian report. Scores lower than that, which range from 601 to 660, are considered non-prime, and scores between 501-600 are considered to be subprime. A little less than 17 percent of financing is subprime. The better you score on your credit, the more favorable the lease deal you receive. However, you are able to expect a good leasing offer for a credit score that falls within the 670 to 739 range. This is because the lender will consider your current earnings, your employment history and current loans when you apply. The average credit score for those leasing cars as of 2022's second quarter was 736, according to Experian. Although a lower score won't necessarily keep your from leasing, it may be required to provide more of a down payment, or make higher monthly payments for a lease. The drawbacks of leasing a vehicle when you have bad credit Taking steps to can help overall, but you can nevertheless lease a car prior to repairing it. However, you must be aware of these potential dangers. High cost Having a low credit score can mean that you'll need to make more efforts to qualify for an . For instance, the dealership may ask for a . The lease agreement could also have a higher interest rate, known as a money factor or lease factor in lease terms. This could increase the price of your monthly lease payment beyond what you can manage. You don't have equity when you lease leave with no equity when the lease comes to an expiration. That means that you don't have any cash or trade-in value to apply to the purchase or a new lease. With a higher monthly payment and a lower credit score, you might not have enough savings to afford another lease. Strategies to increase your chances of approval for your lease If you are set on leasing a vehicle that has bad credit, there are some things you can do to improve your chance of getting approval. Make a large down payment in order to demonstrate to your potential lender that you're dedicated to paying on your lease, you should ensure that you are paying higher than your minimum down. This is known as capitalized cost reduction. The more cash you can put in a down payment, the lower your monthly payments will be. Find a loan cosigner One way to gain approval is to do so . Cosigners add a layer of security for the loaner. The cosigner is responsible for the lease, and their credit may be affected if you don't pay. Additionally, if you do not make your the lease payments, your cosigner will be accountable for the failure. If you're looking to cosign, be sure to choose an individual from your family or friend who has a stronger credit history than you. Try to reduce your debt-to-income ratio. Lowering your debt to income ratio is also a green signal for leasing businesses. The debt-to-income ratio, also known as DTI is the sum of your monthly payment multiplied by your monthly income. As someone with poor credit, you want to reduce this amount by paying off your debts, refinancing at lower rates or by raising your earnings. It is also possible to consider a . They let you combine multiple debts into a single payment, making them more manageable to manage. You can utilize a credit card to see the current status. Look around when looking for an auto lease, look around at various dealerships and leasing companies to determine which one offers the most advantageous deal to those with bad credit. Because each dealer evaluates lease offers in a different way and therefore, you'll receive a more favorable leasing offer than you expected -- and possibly at a an lower cost. You can also try to of your lease, though you might have less leverage if you have bad credit. Consider negotiating the vehicle's buyout price which is the amount you would pay to buy the vehicle at the end of the lease contract. This price generally cannot be changed after the lease expires and you should discuss it in advance when you think you'll decide to buy the car. You could also negotiate the vehicle's annual mileage allowance if are aware that you will be driving frequently. Other ways to lease a car even with bad credit If you cannot find a lease or lease with favorable terms, a lease transfer may be an alternative. Companies such as SwapALease and LeaseTrader specialize in pairing people looking to get out of the lease with those who would like to lease. Lease takeovers are still subject to a credit check to qualify however, the terms may be more favorable without requiring the payment of a down. Another alternative is . Not all dealerships provide used vehicles for lease, so you may have search around to find an area-specific dealership which offers this option. If so, make note of all the terms and the amount you'll have to pay during the lease. It is possible to get a better deal by purchasing an used vehicle. There are "lease here, pay here" dealers that offer financing in-house for vehicles that they lease. The downside is that the leases usually come with much higher cost and higher monthly payments. Furthermore, the lease payment conditions are usually not ideal--you may even be accountable for the cost of any needed maintenance on the vehicle. The variety of cars offered on lease here, pay here dealers may be more old or less available. It is important to note that while you can lease cars with bad credit, you may not get a competitive lease offer. This could result in a higher down payment, more frequent monthly payments or an automobile that isn't the first option. If you're in a position to do so, taking steps to boost your credit score may lead to a better lease agreement in the near future. Shop around and try to modify the lease terms regardless of how good your credit, to obtain the best deal possible.


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Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ins and outs of securely borrowing money to purchase an automobile.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to control their finances through providing precise, well-researched and researched facts that break down complicated topics into bite-sized pieces.






Auto loans editor




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