Is it Possible to Lease a Car With Bad or No Credit at All?
Car commercials have a funny way of making you think you can just walk into a showroom, pick a car and leave with it. The elusive reality is that it is not that easy especially if you have no credit or worse, if you have bad credit. Serious credit problems will make you have a hard time when trying to lease a car. The stiff competition between companies wanting to stay on top of the business has seen some consider taking extra steps to maintain their reputation.
As such, it isn’t entirely impossible to lease a car if you have a bad credit or when you do not have credit at all.
One can get a car lease by submitting a credit score to a dealership and await approval. A credit score, also known as a FICO score is a measure of one’s credit worthiness and is usually between the number 300 and 850. If your credit score hits the mark 680 and above, you are lucky and might get a car lease without a problem. However, if the score is less than 680, it will be considered subprime. This is where the problem lies. A subprime credit score is a little score, and for a lease to push through, one will have to cater to other setbacks that will allow them to rent a vehicle successfully.
Problems You Will Face With a Bad Credit
A low or no credit score draws high-interest rates from dealerships as they cannot establish how much of a risk you can be.
DIFFICULTY IN APPROVAL
Sometimes applying for a lease of a car with no or bad credit proves difficult as opposed to applying for a loan of a new car. This is because the company you are looking to sign a lease with will seek the help of their trusted financial institutions to check your credit history and if it is not good, they will consider other many factors just to ensure everything is in place before handing out the car keys.
Not only will you have to deal with high-interest rates to lease a car with bad credit history or no credit at all; you will be required to pay a lump some amount of money upfront before being considered for the car lease.
These disadvantages should however not deter one from going ahead and leasing a car of their choice. The following tips will help in the matter.
Know What You Want and What You are Up Against
Before setting out to lease a car, it is important that you sit down and do a serious scrutiny of what you want and all the factors included in the process.
GET YOUR CREDIT REPORT
Get your credit reports from Experian, Equifax or TransUnion and do a credit check to determine your score. We are entitled to one report annually from these credit bureaus. This should let you know if you are eligible or not. Consider the type of vehicle that you want, how much it costs and if you will be able to meet the monthly payments without a problem.
CONSIDER OTHER OPTIONS
If it shows that it might give you problems financially, you can consider other options. Knowing what to expect will also eliminate the surprises you will meet that might demotivate you from leasing a car.
Determine Your Credit Situation First
An in-depth analysis of your credit score is mandatory before you deciding to lease a car. This includes determining whether it is that bad or why you are in that situation in the first place. There are bad credits, and then there are really bad credits. Were you late on making some payments on a credit card account? That isn’t a severe credit issue. However, if you recently suffered from bankruptcy or home closure, that will qualify for a bad credit score, and this might prove to be a challenge for a while.
TRY MENDING YOUR CREDIT SCORE
The annual report everyone is entitled to often includes a summary of all your credit information, loans, mortgages and other leases if there are any. This is how a check on your credit information will show if you have been bankrupt. However, many dealerships will rather look at your credit score as opposed to your detailed report. Having your credit score with you will help you know where your situation sprung from and if it can be mended.
It should be noted that different credit bureaus will give you various reports on your credit. This is because they use different data to arrive at the final score. Comparing these reports from different credit agencies will help you determine the score you will use which will be the one with a higher score, of course.
Look for Cheap or Used Cars
A little logic won’t hurt. If you are looking for something you will want to keep for years, there will be no need of looking for new and expensive cars, especially if you have bad credit. Even if you think you can afford something nicer, to avoid the challenges that come with leasing, you should consider the cheap ones or the used cars that are easy to qualify for. It will have small monthly installments that will favor you and save you the trouble of having problems when your finances get messed up. Furthermore, it will act as an opportunity for you to find a great and an affordable car of your dream.
WHEN SHOULD YOU SHOP FOR USED CARS?
When manufacturers are moving their inventory, getting financed is easy. It is therefore only logical to start your search for new cars at a year’s end. During this time, dealerships get new models and are close to sales incentives. Individual dealerships have no problems financing people with low or bad credits. However, they might require a large down payment or slap you with high-interest rates.
Get Yourself a Cosigner
Although it might not seem like a good idea, getting a cosigner especially for first-time car leasing and for those leasing a car with no credit is sometimes the only alternative, if other methods fail. A cosigner could be a parent if you are still young, or a relative. They will agree to put their name on your loan car, this assuming the responsibility of equally being liable should fail to pay back on time. This is a good way of using car lease to rebuild credit history for those who’d become victims of bad credits as once it has been approved, the next time you want to lease a car it won’t be a problem. Of importance here, is to make the monthly lease payments on time not only for the sake of your credit score but also in the interests of your cosigner’s.
Save on Your Down Payment
Considering how dealerships or credit companies will charge you high interests or require a percentage of the car cost to be paid beforehand, it is only ideal that you save your money until you have enough deposit. It follows that the amount of deposit required is not so extreme if one wants to lease a car. During this period, you can also work on improving your credit score. Improving your credit score is a factor that is substantially determined by your necessities. If having a car is not something you are in a hurry to do, it will do you best to be patient for a while and build on its improvement.
PLANNING ON A DOWN PAYMENTS
How do you go about this? First, determine the amount you can afford to set aside every month for a vehicle of your choice. Then, uphold consistency on payments for any credit account. The payment should be made in time and in full. If necessary, you will have to use your savings. This is because your credit score is the largest determinant when one wants to lease a car. When you have set aside enough money for your down payment, then you stand a chance of leasing a car of your choice.
GET LEASE QUOTES FROM DEALERS
Seeking a car lease with bad credit leaves one with such a desperate feeling that when they land into a dealership that approves their lease, they jump on the opportunity. Getting the first deal doesn’t mean that it is the best deal. Getting lease quotes from as many dealerships as possible will help you decide once you find a car that you want, you can use the dealership to your advantage. The competition between companies might lead to lowering of rates which will favor you in qualifying for a lease.
CARRY YOUR CREDIT SCORE
Consequently, it is recommended that when you are shopping around for a car, you tag along with your credit score, probably a printed one. This will save on the disappointment that arises if the dealership wants to determine your credit score using their means. The heavy task resting on your shoulders, in this case, is getting the dealership to strike a deal with you without doing a credit check first.
Seek the Help of Subprime Lease Programs
If you have low credit score or have a bad credit and you have been unsuccessful in trying to lease a car, it is important that you seek the help of lenders specializing in subprime loans. If the dealership you got and the finance body they work with cannot approve your case, you shouldn’t give up. A credit union specializing in subprime loans might accept your request faster than a bank would. Arranging for a pre-approved loan with a subprime lease program might get you even better rates. Most of these lenders do align their scrutiny so much on the rating system. This means that you will pay the same rate as that of a person with a high credit score. Unfortunately, dealerships will charge higher interest rates because you do not have a credit score to help them discern how much of peril you can cause.
Assume an Existing Lease
Perhaps this might be the easiest choice for you to make. What does assuming an existing lease mean? If someone else had leased a car and is struggling with the payment of the monthly lease installments, you can approach them and strike a deal to continue making the payments and have the car. The good thing about this deal is that there are no other conditions and is in no way less official or binding than a deal signed with a dealership directly.
BENEFIT FROM ANOTHER PERSON NOT PAYING
Before the person you are striking a deal with gives you the car and the necessary documents, it is often mandatory for a dealership to still check your credit score. However, because you will be lifting a burden off their shoulders by taking over a lease from someone whose payment wasn’t forthcoming, they will cut you some slack and go ahead in approving the lease.
PROVIDE DETAILS OF YOUR EARNINGS
Prove that You Earn Enough. Having a real income with no credit history will still pose a great challenge to getting a successful car lease. Proof of sufficient income will, however, necessitate the lease process. This is often a car leasing process for people who just came in the US. The proof should show that the income you get is sufficient and that it is steady. It should detail the income of the past as well to indicate that it is enough to cater for the lease payment and your other monthly bills.
To establish your credibility, you should also provide a couple of references that will vouch for you and show that you are not a credit risk.
Making a car lease with bad credit is a difficult thing to do, but not as much as how it is to get a car lease with no credit at all. However, it still is a doable thing. It requires your knowledge of what it is that you want, doing a credit check, shopping around and being patient, to ensure that you get a deal that favors not only you, but your budget as well. You wouldn’t want to get yourself a deal that will leave you financially paralyzed. If your credit score is extremely low, or when it doesn’t exist at all, there are other options you can explore to get a car of your choice. A good example is looking for a friend who has the car you desire and who accepts payments. You can then strike a deal with them. But if your efforts amount to walking away with the essential documents as well as driving off with the car, well, you will take a sigh of relief and say it was worth the struggle.