Those who find themselves in the situation of having to lease a car with bad credit are usually those who don’t have a perfect credit history, a credit score that it’s not high enough to make them eligible or a higher than expected debt-to-income ratio.
When a person wants to lease a car, the first thing the dealer does is inspect the person’s credit score. The credit score is computed by taking into consideration the person’s credit history and is compared by the dealer to a limit considered acceptable or better said high enough to qualify the consumer for the desired car lease. Usually, when the score credit is less than 680 or 700, the leasing company rejects the request because it labels the consumer as high risk individual. This requirement is mostly due to the fact that in the case of many car leases no down payment is required. That’s why the credit score requested for a lease is many times higher than the one required by a car loan.
A car lease offered to a person with bad credit is also risky because such a person is more likely to miss payments and force the leasing company to repossess the car. That would result in high losses for the company. The risks get even higher if the person requesting the lease is in serious debts that involve payments nearly as high as the income. That means he/she will find it hard to cover another monthly payment. There are people in such debt that still have a good credit score, but they will still be rejected.
Even so, there are still left a few chances for those who want to lease a car with bad credit. The only difference is that if you have bad credit you’re more likely to be obliged to pay a larger down payment and a higher interest rate. Another option is to cover a refundable security deposit. But even if all the three expenses above apply, you will still have to pay a lower monthly payment than if you would opt for a car loan. What makes the difference between an approved car lease and a rejected one, even in the case of people with bad credit is the larger down payment. That’s an element you should consider the moment you decide to apply for a car lease even if you have bad credit.
If you find it hard to provide a large down payment, you should think about finding a co-signer. You should choose a family member or a close friend that has an above average credit history. He will be responsible if you, as a primary borrower are unable to cover the payments. A cosigner is not the same with a co-leaser. You will still be signing a one-party lease. The co-signer will just make more confident the leasing company about approving your request.
If you get a car lease with bad credit approved, but as time passes you realize that you can no longer afford paying you should immediately notify the leasing company. The staff there will be able to offer you some options or a payment relief. If you don’t try to do your best and keep up with your payment, you will risk causing even more damage to your credit. So, in order to find a deal that you can consider budget friendly, you should shop around, because the different leasing companies offer different lease deals even for those with bad credit. Some dealers even have special providers willing to help out people with a low credit score.