Credit Score Necessary To Lease A Car
If you are one of those people that prefer to drive new cars frequently, it means that leasing is the option for you. If you can stay within the pre-established mileage limit and take good care of the car, you’ll be able to get a new one every three years. However, it isn’t as simple as it sounds as in order to become eligible for such a leasing contract, your credit score must be in a good shape. The minimum limit can vary so we cannot give you a figure, but if yours is on the lower end of the scale, you’ll either be refused the lease or if they’ll give it to you they are going to ask for a high interest rate.
Most of the car leases are closed end types. This means that you drive the vehicle for a certain amount of time, like three years for example. When the lease is over, you can return the car and walk away with no strings attached. However, if the vehicle shows signs of more than normal wear & tear or you drove it over your mileage limit, prepare to pay additional fees. You have the option of buying the car for good by paying its residual value as well as a processing fee. If you choose to buy it, you don’t have to worry anymore about those additional fees regarding over mileage or excessive wear and tear.
As most of you probably know, the credit score consists of a three-digit number and it is complied based on your credit history. Fair Issac Corp., who is in charge of compiling the FICO credit score, says that the factors that determine the credit score are credit limits, how much money you owe, bill payment history, the types of accounts you have and the length of credit history.
Lease Guide says that in order to become eligible for leasing a car, your credit score must be at least 640 although some can qualify even if their score is 600. You will get the best interest rates if your score is anything about the 700 mark. You have to understand that the lower the score is, the more money you will pay for the interest rate in order to offset the risk that the lender takes when borrowing you. Those that choose to put down a bigger security deposit can get lower rates.
If the level of your credit score is in between good and bad, you might have a few ways of raising it to get qualified for affordable rates. What you must do is get a free copy of your credit report from Equifax, Transunion or Experian. Once you get it, check out if there are any unverifiable negative items and if you find these, you’ll have to file a dispute. If these items cannot be verified, the credit bureaus must remove them which will raise your credit score and hopefully you will get the credit score necessary to lease a car.
Those of you that have a credit rating that is in a bad shape and there is no way of improving it in order to become eligible for a lease, still have a chance. What you can do is take over someone else’s lease. In other words, you will have to find someone that wants to get out of his lease and you will agree to take his vehicle and the payments. In this case, the leasing companies don’t have as much restrictions and requirements so you will have more chances of signing a deal.
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