A cosigner can help you get approved for auto loans or leases if your credit score is less than perfect. However, leasing is typically harder to qualify for than an auto loan, even with a cosigner.
Having a Cosigner for a Car Lease
Cosigners can increase your chances of getting approved for new credit, including a car lease. They let you “borrow” their good credit score, helping you meet credit score requirements if yours isn’t up to par.
Many lenders and lessors require bad credit borrowers to have a cosigner before they can approve you. If you have a credit score around 660 or lower, it isn’t uncommon for a lessor to ask you to bring a cosigner to qualify for the lease.
Cosigners agree to pay for the car if you’re unable to, which increases the chance of you successfully completing the lease. With a back-payer, there’s less of a chance for default, which increases your odds of getting approved.
Cosigners, however, are taking on a big risk by helping you out. Your cosigner doesn’t get any rights to the leased vehicle, and if you become unable to pay they're responsible for making your monthly payments. Their good credit is at stake, too, since your payment activity impacts both your and their credit scores. Because of these risks, not everyone is willing or able to cosign.
Qualifying for a Lease With a Cosigner
Qualifying for a lease with a cosigner could be the way to go if you have poor credit. If you’re in need of one, a good place to start is by asking a close family member or friend to cosign. Anyone can be a cosigner (besides a spouse) – a friend, co-worker, cousin, parent, etc., as long as they have a good enough credit score to help you meet requirements and enough available income to cover the payments if you can't.
Cosigners with a worse or similar credit score to yours aren’t likely to help you qualify for an auto lease. The key with cosigners is to have someone with a better credit score who’s proven that they can manage credit well and can help pick up the slack if something goes wrong with the lease.
Keep in mind that leasing companies tend to have high credit score requirements, so there’s no guarantee that bringing a cosigner along can get you approved for a car lease. Auto leasing is almost always for brand new vehicles and may require a higher income requirement as well. Keep in mind that cosigners don’t help you meet income requirements. If your income is what’s stopping you from qualifying for a lease, then a co-borrower could be the answer.
Vehicle Financing May Be Easier with Poor Credit
Leasing can be a great vehicle option, but with poor credit, you may have a better chance of qualifying for an auto loan for a certified pre-owned (CPO) car. These vehicles are often just coming off-lease, and usually less than five years old. Many borrowers start their credit repair journey or start their credit history off with an auto loan, and often with a used vehicle. Used cars tend to be less expensive than their new counterparts, and it’s usually easier for bad credit borrowers to qualify for smaller loan amounts.
Finding a cosigner willing to help may be the biggest hurdle you come across with poor credit, whether you're leasing or buying. There are many lending institutions and dealerships with auto lenders that can assist borrowers in tough credit situations, though, called subprime lenders.
Subprime is another word for bad credit. These lenders are signed up with special finance dealerships, and they’re equipped to handle many different credit circumstances such as situational bad credit, habitual bad credit, first-time car buyers, bankruptcy, and more. Since subprime lenders often work with bad credit borrowers, your credit score isn’t the most important factor in determining your auto loan eligibility – your entire financial stability matters too.
Building a better credit score usually means starting out with a manageable loan that has the potential to boost your credit score with timely payments.
Finding a Dealer That Fits
Qualifying for a lease with bad credit isn’t always possible. Most leasing companies have high credit score requirements, and a cosigner may not be enough for an auto leasing approval. Auto loans are typically easier for bad credit borrowers to qualify for since there are many lenders able to assist with credit challenges.
Here at Auto Credit Express, we want to eliminate the stress of driving all over to find a dealership with bad credit lending options. We’ve amassed a network of dealers that assist borrowers with less than perfect credit. Our connections reach all 50 states, and it’s completely free to start the search for a dealership in your local area with bad credit resources. Fill out our auto loan request form, and we’ll get right to work finding a dealer for you.