If you need a car for college, you may be wondering if you should lease or buy a vehicle. While both options may work, you'll find that qualifying to lease a car is more difficult than it is for financing, especially if you have a limited credit history.

Can You Lease a Car as a College Student?

Does Car Leasing for Students Make More Sense than Buying?Leasing is a popular alternative to car buying for millennials. You get a new vehicle every two or three years, and you aren’t responsible for it once the lease is up. But, can you lease as a student? Yes, it might be possible to lease a car as a college student, however, meeting the requirements and getting approved can be tricky. Let’s look at what’s required to lease:

In order to qualify for a lease, most lenders want you to have good to excellent credit. Double check where your credit stands by going to www.annualcreditreport.com. Here, you can get a free copy of your credit report every 12 months from each of the three major credit bureaus: Experian, Equifax, and TransUnion.

Some lenders are more lenient than others and may approve you for a lease even if your credit is less than perfect and your credit history is sparse. There’s a catch, though. These lenders may ask for additional documents or give you less ideal terms in order for you to qualify.

If you don’t meet the typical credit requirement, you may need to show proof of income. To do this, you need to give the lender a copy of your most recent pay stub. Because the minimum income needed varies by lender, you’ll want to know what it is before starting the application process. Once the lender has your income, they’ll determine your debt to income ratio (DTI). To find your DTI, you simply add up all your recurring monthly bills and divide the total by your gross (pre-tax) monthly income. Lenders want to see a DTI of less than 50 percent, including the lease and insurance payments, and this can be a challenge with a part time job.

It’s also important to remember that if you’re a full-time college student, you probably don’t have the income to qualify for a lease. Most leasing companies want to see a solid job history and not just something you’ve been doing for the past few months. If you have a long job history with your current employer, it ultimately depends on how many hours a week you work and what your pay rate is.

So, what’s the best way to lease a vehicle if you’re a college student and don’t have a full-time job yet? Become a co-lessee with a lease in a parent or guardian’s name.You won’t be the primary lessee, but as long as that person has excellent credit, they may be able to add you to the lease. You’ll be able to build up your credit while still a student, and the primary lessee can save money by choosing to lease rather than buy.

Buying May Be Better

Leasing sounds pretty great, but if you need a car while still building up your credit, you may want to consider financing instead. You may not get the latest and greatest vehicle, but it’s a great stepping stone to a solid credit history. There are many special finance lenders and college student discount programs to help you.

You may find it easier to qualify for financing, as well. Financing requirements with subprime lenders include proof of income (generally a pre-tax income of at least $1,500 to $2,000 a month) in the form of a recent pay stub, at least three years on the job, a down payment of at least $1,000 or 10 percent of the vehicle’s selling price (whichever is less), and proof of residency with a recent utility bill.

Similar to being a co-lessee, you can also become a cosigner on an auto loan. You get the benefits of positive payment history being reported to the credit bureaus, but you won’t be the primary borrower or have legal rights to the vehicle. The only way you can become a cosigner is if your parent(s) have good to excellent credit.

Driving a Leased or Financed Vehicle

The last option you have is for your parent to either lease or finance the car in their name, and simply give it to you to use. Because you’re a family member, this isn’t an illegal practice – like a straw purchase is – and you’re allowed to use the vehicle. This won’t help you build up your credit, though, because your name isn’t associated with the loan. But this another viable option if you simply need a car for the time being.

Get Yourself Ready for the Future

Whether you need a car to get to and from classes, or need one to move yourself in and out of an apartment each year, it’s important you do some research ahead of time and understand your options.

If you need to know where to turn for a special finance dealer, Auto Credit Express wants to help. We work with a nationwide network of dealers that have the lending resources available to get you the financing you need. Let us guide you toward a local dealer today. It’s simple to get started by filling out or free online auto loan request form.