Consumer Car Buying Advice Blog

Auto leasing you can reduce your monthly payment but applicants financing a bad credit car usually won’t qualify for one

Financing choices

Applicants with bad credit sometimes ask if they can lease a vehicle instead of signing up for no credit auto loans.

Quite frankly we’ve been asked this question many times here at Auto Credit Express where we’ve been associated with bad credit car sales since 1992. We even created a web site so that applicants with poor credit can view such topics as buy here pay here dealers and repossession as well as today’s subject, leasing a car with bad credit.

But you first need to understand the differences between buying and leasing.

Buying

Buying (retail financing) a car involves financing the entire cost of a car, less any down payment. Interest rates can range anywhere from zero percent for manufacturer-backed loans (such as those from Ford Motor Credit) to as high as twenty-nine percent or more in some states for people with really bad credit.

Buyers with good credit sometimes don’t need a down payment, while bad credit lenders usually require a minimum of ten percent or $1,000 down, whichever is less.

Retail financing also covers the widest range of customers – from those with excellent credit to those who need horrible credit auto loans.

Leasing

When compared to retail financing, lease payments are generally lower because you’re only paying for the portion of the vehicle. In the case of a 2 year lease, you’re paying for 24 months of interest plus the amount the vehicle drops in value (its depreciation) over those same 24 months (this is determined by the leasing company).

Because car leasing typically requires no down payment, people who lease are usually “upside down” (the vehicle is worth less than the lease buyout) during the entire lease. This means that lenders consider leasing to be a higher risk than retail financing. If a lessee (person leasing the vehicle) misses or stops making payments, the leasing company faces a greater chance of losing money if the car has to be repossessed.

Bad credit auto leasing

Because lenders take a higher risk with leases, they usually offer them only to their most qualified customers – people with very good to excellent credit.

Bad credit buyers shouldn’t confuse the term “rent to own” or dealers that offer used car leasing with typical new car leases. That’s because these rent to own dealers as well as car lots that offer used car leasing normally require you to make a fairly substantial down payment along with high monthly payments. In addition, the vehicles typically offered for rent or lease are older used cars.

Before you decide

If you have bad credit, we ask that you do something before you consider dealing with a rent to own dealer that offers used car leasing.

First, try us at Auto Credit Express where we’ve helped thousands of people with bad auto credit find a dealer that for their best chance at a problem credit auto loan

So if you’re serious about getting your car credit back on track, you can begin now by filling out our online car loans bad credit application.

Tags: auto leasing, Bad Credit, bad credit car, car leasing

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