Bad Credit Car Lease
When you think of car leasing with bad credit, you basically need to find some form of financing for a new car lease when the customer doesn’t have a spotless credit history, a reduced credit score, or a pretty high debt to income ratio.
The problem usually appears when a customer tries to lease a car and the dealer has to verify the credit history an score (which represents the credit history in a number system), thus finding that the credit history is not exactly cleaned therefore, having to exclude the customer from the best car deals. The worst case scenario is when the lease is completely refused.
If you are a customer with a credit score that is lower than 680-700, banks and credit companies look at you like you’re a “liability” posing a greater risk for them than someone with a higher score.
A certain consumer with a lower credit score is classified as a “subprime” borrower. Considering problems that have happened in the past in the leasing industry have made things more difficult for subprime borrowers to get loans or find car leases. More recently lenders have begun to open back ups and because of that they can approve more subprime loans. Another method is related to the use of a cosigner that willingly agrees to sign the contract with the consumer, making it more secure to the leasing company.
Since leasing is currently considered by financing companies a higher risk than purchasing a car with a loan because of the fact that no down payment is made and low monthly payments that determine a so called “car use loss”. Because of this, car leasing may require a better score than getting a loan for the purpose of purchasing a car.
In the eventuality of the consumer misses several payments, a leasing company may loose even more money in their endeavor to repossess the car.
In case of high monthly fees or high debt loads, the customer may have a problem. If a applicant’s debts are very high compared to the monthly income, than the leasing companies may not agree to make a lease, adding another debt to that person since there could be increased problems in the future. Not even a clear credit history may be enough to overcome the risk posed by high monthly debts.
In case you feel you’re in trouble and cannot afford to pay the monthly fees required by the leasing company, than you should go ahead and contact them and try to get payment relief, ask them to close the contract and get the car. The earlier you do this, the better chance you may have in getting the necessary help. Or you have to try as much as possible to make your payments. Consider that even a voluntary lease repossession can severely damage your credit history, leaving a mark that could last up to 7 years.
Getting a cosigner can greatly improve your chances of getting a lease. Know that you have to take a family member, friend or relative that must have a higher credit score than you, and it is willing to be responsible in case of missed payments. This will drop the risks the leasing company takes when leasing you the car.
Know that American brands like General Motors, Chrysler and Ford will not accept leasing easily because of the high risks. You may get lucky with foreign brands like Toyota, Nissan, Mazda, Hyundai or Honda. They are more willing to accept less than perfect credit for car leasing
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