Recent trends in the automotive world are beginning to show a downturn in several areas. One that is feeling the negative effects is the leasing market. Falling residual values are forcing manufacturers to offer more incentives on their lease deals in order to make leasing look like a better option. But, as a person with bad credit, is it possible to lease a vehicle? The truth is, leasing is still very difficult for consumers with less than perfect credit.
According to Edmunds.com, this dip in leasing is signaling the end of an era of steady growth. The car leasing market fell 4.4 percent in the first half of 2017, double the decline in overall car sales, which saw a 2.2 percent drop year over year. Leasing hit a record high in the first half of 2016, making up 31.9 percent of new car sales.
Find Out if You Qualify
Because it is rare to find a dealer who offers leasing to customers with credit challenges, it is important to research leasing options very carefully. Like car financing, the first step you are going to want to take is to view your credit reports and at least one credit score. Once you know where your credit lies, you will be able to look into dealerships that may lease to borrowers with less than ideal credit.
Remember, not all lenders will offer a lease program you qualify for. The lease deals you hear in advertisements are only available to consumers with the best credit. That doesn’t mean there are no programs out there; you will just need to search for them if you have tarnished credit.
Also keep in mind that leasing a car with bad credit means you will face some of the same challenges as buying a car with bad credit. If you do manage to qualify for a lease, it will be more expensive and carry a higher interest rate (referred to as the “money factor” in leasing) than those for borrowers with perfect credit. It may also require a security deposit (or multiple ones), plus fees, and the first month’s payment up front.
Is it Better to Lease a Vehicle?
When you lease a vehicle, you are essentially paying the leasing company for the value of the vehicle over the time you’ll drive it. Leases typically last two to three years, and can be a great option if you only want to drive new cars—assuming you have the credit to qualify and the income to keep up with constant payments. However, leasing is not for everyone.
There are some definite points to consider before deciding if a lease is right for you.
- Leased vehicles are expected to be returned in good condition. Little things like scratches and minor dings can turn into major charges when you return a car with “excessive wear and tear.” So, if you are a little accident-prone when it comes to your car, leasing may not be for you.
- Leased vehicles carry a mileage limit. Though this amount will vary, it is typically a pretty low average, around 12,000 miles annually. This is something to note if you are a fan of spontaneous road trips, or have a long commute to work. Those miles can add up quickly, as can the resulting charges you’ll face for going over mileage, although you can buy extra miles and roll the additional cost into a lease.
When Buying with Bad Credit is Best
If these points make you think twice about leasing, remember that it is possible, and easier, to qualify for a car loan with bad credit, if you take the right steps. Here at Auto Credit Express, we specialize in helping you do just that.
We have one of the largest networks of new and used car dealers in the U.S. who have lenders that work with people in less than perfect credit situations. We can help you take your first step toward being matched with one of the specialized dealers in your area. Simply fill out our no-obligation online auto loan request form now to get started.