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Bloomberg/Getty Images
4 min read Published 11 October 2022
Authored by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ways and pitfalls of using loans to buy a car.







Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping their readers gain the confidence to control their finances through providing precise, well-studied information that breaks down complicated subjects into bite-sized pieces.









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For many, it is an affordable way to get in the driving seat of a new car. Leasing comes with lower monthly payments , and also eliminates many of the other costs related to car ownershipfor example, repair costs, which the dealer will largely cover. But to take advantage of the lower costs that come with a lease, you have to qualify. Leasing a car with bad credit can be more challenging. What credit score do you need to have to be able to lease an automobile? If you are looking to lease a car your score on credit is a crucial part of the equation. Dealers prefer customers with excellent credit scores with higher interest rates . However, should you have a poor scores, they might not be able to lease you a car in any way. The credit score needed to lease a car differs between dealerships. the prime score ranges from 661 to 780. Prime scores comprise 65 percent of total financing, as per the Experian report. Scores that are below this, ranging from 601 to 660, are considered non-prime, and scores that fall between 501 and 600 are considered to be subprime. Less than 17 percent of the financing available is subprime. The higher your credit score, the better the leasing offer you will get. However, you can still get a favorable lease offer when you have a credit score of the 670 to 739 range. This is because the lender will take into consideration your income, work history, and current loans before granting you a lease. The average credit score for those leasing cars as of the second quarter of 2022's was 736, according to Experian. While , or a low score will not keep you from leasing, you could be required to make an additional down payment or make higher monthly payments for leases. There are a few disadvantages of leasing a car when you have bad credit Taking steps to can help overall However, you may nevertheless lease a car prior to repairing it -- just be aware of these possible pitfalls. Costly Having a poor credit score can mean that you'll have to work harder to be eligible for an . For example, the dealer might require an . Your lease offer may also have a higher interest rate, known as a money factor or lease factor in leasing terms. This could inflate the cost of your monthly lease payment beyond what you can manage. There is no equity when you sign the lease , you walk away with no equity at the lease's expiration. That means that you don't have any cash or trade-in worth to put towards the purchase or to a new lease. If your monthly payments are higher and a lower credit score, you might not be able to save enough to pay for a new lease. Methods to increase the likelihood of approval for your lease If you are set on leasing a car that has bad credit, there are some things you could take to increase your chances of getting approval. You can make a huge down payment in order to demonstrate to your potential lender that you're dedicated to paying the lease off, make sure you pay higher than your minimum amount down. This is referred to as capitalized cost reduction. The more money you provide in a down payment, the lower your monthly payment will be. You can get a loan cosigner A different method to get approval is through . Cosigners add an additional layer of security to the lender. The cosigner is responsible for the lease, and their credit will be affected if you fail to pay. Additionally, if you fail to pay payment on the lease, your cosigner will be responsible for this. If you're looking to cosign ensure that you select a trusted family member or friend who has an excellent credit score than you. Make an effort to reduce your debt-to income ratio. Lowering your debt to income ratio can also be a positive flag for leasing businesses. The debt-to-income ratio, also known as DTI, is defined as the monthly amount of your payments multiplied by your monthly income. If you have poor credit, you want to reduce this ratio by making payments on the debt, refinancing to lower rates, or by raising your earnings. It is also possible to consider an . These allow you to combine several debts into one payment, which makes them much easier to manage. It is possible to use a calculator to see what your current situation is. Shop 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. Given each dealership evaluates lease offers in a different way, it is possible you could get a better lease offer than you expect -- and perhaps at an lower cost. You can also try to extend your lease, but you may have less leverage when you have bad credit. Consider negotiating the vehicle's buyout price that is the amount you would pay to buy the car at the end of the lease. This price generally cannot be negotiated after the lease ends and you should discuss it in advance in the event that you believe you might decide to buy the car. You could also discuss the vehicle's annual mileage allowance when you know you will be driving a lot. Other options to lease a car with bad credit If you cannot find a lease or lease that has favorable terms, a lease transfer may be an option. Companies such as SwapALease and LeaseTrader are experts in bringing together those who wish to end a lease with those who want a lease. Although lease takeovers require the submission of a credit report to be eligible, the terms could be more favorable without requiring an upfront payment. Another option is . Not all dealerships provide used vehicles for lease So you might have search around to find an area-specific dealership which offers this service. If you find one, be sure to note the entire lease agreement and the amount you'll have to pay during the lease. You may find an even better deal by purchasing a used car. There are "lease here and pay here" dealers who provide financing in-house for vehicles that they lease. However, the downside is that these leases often come with a much higher cost and more expensive monthly installments. In addition, the lease payment terms are generally far from ideal--you may even be responsible for covering the costs of any needed maintenance on the vehicle. The variety of cars offered on lease here, pay here dealers might be older or more limited. In the end, even though you can lease cars even with bad credit, you may not get an offer that is competitive. This could result in a higher down payment, greater monthly payments, or leasing an automobile that isn't the first option. If you have time and are willing to take steps to boost your credit score may lead to the possibility of a better lease in the near future. Look around and modify the terms of your lease, no matter the credit rating, in order to get the best deal.


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Authored by Auto Loans Reporter

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



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain confidence to control their finances by providing concise, well-researched, and well-constructed information that breaks down otherwise complex topics into manageable bites.






Auto loans editor




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