Leasing a car has become a popular alternative to car buying. In 2016, Edmunds found that the volume of leased vehicles reached an all-time high of 4.3 million. You may be able to lease a vehicle, even with bad or no credit, depending on your circumstances.
Leasing works like this: you agree to pay a fixed payment per month over a set time period, usually 36 months. Once this period ends, you have the option to buy the vehicle (for a set price), sign another lease, or walk away. But when you lease, there some important limitations to keep in mind:
- Mileage restrictions – Mileage typically ranges from 10,000 to 12,000 miles per year. If you go over the limit (at lease end), you will be charged a set amount per mile. You also have the option to purchase additional miles, but only at the beginning of a lease.
- Maintenance – You must keep up with basic maintenance, such as oil changes and tire rotations. If you don’t, you could be responsible for excess wear and tear charges.
- Insurance – You must keep the required amount of insurance on the leased vehicle.
- Other costs – You are responsible to pay for any maintenance and repairs not covered by the warranty.
With this in mind, if you decide to apply for a lease and your credit isn’t stellar, you typically will need to provide these additional documents:
- Proof of income – A recent pay stub from your current employer.
- Personal references – A list of people you know. We recommend at least six, with names, addresses and phone numbers (all from different addresses, none from your own).
- Proof of residency – Bills such as rent or mortgage, with your name and address on them, of your current place of residence.
Ways to Get a Lease with Bad Credit
Usually, you’ll need a good credit score to qualify for a lease. But, it’s still possible to get a lease with little to no credit. Just be aware that, if you qualify, your monthly payment will be higher because of a higher interest rate. But even then, it might be possible for you to get a better interest rate and lower payments.
- Bigger down payment – Although this won’t reduce your interest expenses (all you’re doing is pre-paying the lease), the more money you put down, the lower the monthly payment. This also makes you look better to leasing companies, and it could make it easier to qualify for the lease.
- Cosigner – In some cases, if the leasing company allows it, you can add a qualified cosigner to your lease. The cosigner must have good credit, and they’re putting their credit at risk to help you with the lease.
- Lease assumption – There’s also the possibility you can go to a lessee and discuss taking over their lease instead of getting a new one. Lenders might be more willing to work with you if you’re planning on taking over an existing lease.
Oftentimes, it's easier for consumers with bad credit to get approved for an auto loan instead of a lease. The key is finding the dealership that can work with you, and Auto Credit Express can help you accomplish this. Our network of dealers has the lending resources available to work with people in challenging credit situations. Get started today by filling out our free online auto loan request form today!