Auto leasing has become increasingly popular because it offers people the ability to drive brand new models, usually for a lower monthly payment compared to financing with a car loan. But if you have poor credit, can you even qualify for a lease? Although bad credit auto leases are sometimes available, qualifying to lease is more difficult if you have less than perfect credit.
Qualifying for a Lease with Bad Credit
Leases are typically reserved for consumers with good credit, so the likelihood of getting approved for a bad credit car lease is relatively slim. Some leasing companies have been known to offer lease deals for people with less than perfect credit, but if they do, they’re going to ask for additional documents, including:
- Proof of income – A recent computer-generated pay stub showing your year-to-date income that proves you make the amount stated on the application.
- Proof of residency – A recent utility bill in your name showing the address listed on the application.
- Proof of phone – A recent phone bill in your name for either a landline or contract cell phone.
- A list of personal references – A list of five to eight personal references complete with names, addresses, and phone numbers.
Why You Should Consider Buying over Leasing
Sure, leasing sounds great and cost-friendly, but financing a vehicle with an auto loan may actually be a more realistic option – especially if you're struggling with credit issues. You may not get the car of your dreams, but an auto loan can help improve your credit score over time so you can work toward leasing in the future.
When you take out a subprime car loan, you get the benefit of having a vehicle, while getting the opportunity to build your credit score. Each on-time payment you make gets reported to the credit bureaus, and as long as you don’t miss any payments, you should see your credit score increase within a few years.
Although your interest rate is going to be higher than average with a bad credit auto loan, you may be able to refinance once your credit improves. Refinancing can lower your monthly payment with a better interest rate. Or, if your credit is good enough, you could even lease your next car and, as long as you have equity, use your current vehicle as a down payment.
Ready to Get the Car You Need?
The bottom line is this: if you have bad credit, you should really consider financing your next car instead of leasing. Not only do you have a better chance of getting approved, you can give yourself extra time to build your credit score so that you can qualify to lease in the future.
If you’re ready to take out an auto loan to build credit, we can help you locate a dealer that can assist you during the process. At Auto Credit Express, we work with a nationwide network of dealerships that have the lending resources available to get you the financing you need. Let us guide you toward a local dealer. Get started by filling out our simple and free online car loan request form right now.