Buying your first car is an exciting event but it can be more stressful and much less enjoyable if you have bad credit. Many buyers with bad credit are uninformed about their options.
They have heard all of the stories about dealerships not being willing to work with a low, or subprime credit buyers. Instead of looking forward to the process of purchasing that first car, these buyers are dreading the long and tedious process.
They normally don’t even consider it a possibility to purchase their dream first car, instead, they just hope to be able to buy anything. But the good news for buyers who ask can you lease a car with bad credit is, yes, yes you can.
Know Your Situation and Your Options
Spend a little bit of time learning about your credit. Understand that a credit score is a range from 300 to 850 and a score of 680 or above is considered prime. A prime score gets you the best rates. Scores of 640 or lower are considered subprime and those buyers will have a more difficult time getting financing.
But there are options for those people if they are willing to be creative to get a car and rebuild their credit at the same time. Because your credit score is such an important part of your ability to get a loan against your car, it is vital that you make sure all of the information is correct.
There are three credit bureaus that can report your credit score so you will want to check all three to be certain there are no errors.
Once you have verified all of the information and contacted any company with incorrect information on your record, then you are ready to proceed knowing that your credit score is accurate.
Some Lenders Specialize in Subprime Loans
Research the lenders and dealers in your area to find out which ones specialize or are willing to work with buyers who have a lower credit score. These lenders will normally charge a little higher rate and may require a larger down payment or a security deposit but they will still sell or lease to a buyer with a lower credit score.
If you are unable to find any lenders or dealership that specialize in subprime buyers, then you can also look at leasing from a buy here pay here dealership. These businesses don’t check your credit score but the downside is that they charge a much higher interest rate and the fees can be larger than a standard dealership would charge.
A Creative Option so You Can Lease a Car with Bad Credit
If you find that your credit score is simply too low to get into a conventional lease for your first car, then you will want to consider a few more creative alternatives. One great option is called lease assumption or a lease transfer.
It basically means that you are taking over an existing lease from someone who either can’t continue to make the payments or doesn’t want the car any longer. You will still need to have the leasing company run your credit but the standards are not as strict.
In addition, most of the time there is an incentive offered by the original lease holder such as some cash or waiving the normal down payment. You can find several websites online that offer exclusively loan assumptions.
Adjust Your Expectations or Terms
Maybe the car you selected to lease is simply out of your current budget. But you might be able to make a deal for a less expensive starter car; knowing that after six months or a year of solid payment history you will trade the starter car in for a lease on the upgraded car.
This plan will get you transportation immediately and it will also help you to reestablish good credit. If a starter car is not going to meet your needs then you will need to be able to make a substantially larger deposit or down payment on a more expensive car.
Some options for increasing your down payment are borrowing money from family or friends, borrowing against a 401K or using a home equity loan. Another option to lease even with bad credit and a small deposit is using a co-signer. This would be a person with a better credit score who is willing to take responsibility for making the payments if you can’t.
Take Steps to Repair Your Credit
You can lease a car with bad credit and it is a smart choice for several reasons, like car title loans no inspection. First, it gets you the transportation that you need. Second, by making on time lease payments you are beginning to repair your credit and demonstrate your financial responsibility.
Third, leasing a starter car with a lower payment will allow you to save money which can be used when you decide you are ready to upgrade to a newer, larger or more expensive lease. In addition there are several other things that you can do which will also help you to improve your credit.
Paying down your credit card balance will and keeping the balance well below your credit limit will increase your credit score and will also help reduce your overall debt load. From time to time, it is a good idea to open a new credit card, use it and then pay off the entire balance.
This will show improved creditworthiness and will also increase the amount of your available credit. Having a larger available credit helps to show a favorable debt to income ratio. It simply means that you have earned the right to be extended credit from numerous sources and that they determine you to be a good risk.
The most important key to remember is to pay all of your bills on time. Even a single late or missed payment will damage your credit for several years. A car loan repossession or default will remain as a negative mark on your credit for seven years and a bankruptcy will remain for 10 years.
It’s a simple choice once you know that you can lease a car with bad credit or how to get a title loan without a job. Not only do you know that you can lease a car with bad credit but you also know that the lease can be an important step in rebuilding your credit.
Deciding to take action to rebuild your credit, being proactive about monitoring your credit and following your financial plan to improve your credit will reward you for years to come with lower interest rates and more financial opportunities.