You may face many difficulties in leasing a car if you have a bad credit. It is advisable that you attempt to improve that score using credit repair, before you go ahead and buy or lease something. Doing so would greatly improve your chances of acquiring the vehicle that you wish to have.
Since the economic crisis struck the world, banks and lending institutions have become wary of granting loans and leases to the people with bad credit or sub-prime borrowers.
Background checks are carried out more comprehensively, and credit reports and history are scrutinized more closely. This history will list out details of your loans, mortgages, past and present credit card statements, and bankruptcies. These details can be obtained from one or more of the three reporting agencies, namely Equifax, Experian, and TransUnion.
Car dealers and manufacturers are eager to do business and gain as many customers as possible. They will seldom turn away a customer only due to bad credit. In fact, they view that person as a profitable customer as they can charge them a higher rate of interest and demand a greater amount as a down payment. This makes the task all the more difficult.
Lease vs. Purchase
A lender would be very hesitant to lease to a person with a bad score. They will view that individual as a risk, and this would make this task a lot more difficult.
It is widely believed that it is a much better alternative to go ahead and purchase the vehicle instead. Getting a co-signor who has a very good credit report will surely aid you in this process.
Greater Down Payment
You will be required to pay an amount as a down payment, which will be much higher than what a person would pay if he had good credit. This may sound unfair, but the explanation behind this is the same as before, i.e., a person with bad credit is sure to carry a higher risk comparatively.
Find a Large Dealership
Locating a large dealership and approaching them for a lease agreement is sure to help you. Since these dealerships are large, they have a great volume of leases that they can provide.
As a consequence, they are well equipped to deal with individuals that have a bad score. You may have to visit many dealerships, before one of them finally agrees to lease you a vehicle, or provide you with car loans.
Unable to Get a Lease?
If you find that you are unable to get it for a car due to your bad credit, then there are very limited options available for you, apart from getting auto loans. Here are a few of them. Keep in mind that building up your score and improving your report are the best possible ways to get it.
- Borrow money from family or friends
- Find a second-hand car being sold by a person who will accept cash payments
- Get a worthy co-signor, who has an excellent credit history
- Purchase your car from a buy-here-pay-here dealer
- Borrow money against a home equity
- Lower installments per month
- Improves your score
- Comparatively lesser down payments
- At the end of the lease, you can return the car and walk away.
- Lesser maintenance required, if it is under the warranty period.
If you have considered this option and are finding it difficult to make payments, it is advisable that you contact your dealership first. The sooner you contact them, the better are the alternatives that they provide. Purchasing a car or a house, or getting a loan for any purpose is not easy in such case, but it is most certainly not impossible, as well.