Here at Auto Credit Express, we give people, typically those dealing with credit issues, an easier way to find car loans. Our expertise in auto financing also leads us to be asked by consumers about leasing. Take this question we recently received:
"I am thinking about leasing a car. What is the minimum credit score needed in order to do this? Thank you!"
The short version answer: there is a minimum credit score needed to qualify for a lease contract, but it's impossible for us to say what that number is because of all of the factors involved. Let's dig a little deeper to learn why.
The Minimum Credit Score Needed to Lease a Car
Just a few short years ago, it was next to impossible for somebody with less than perfect credit to lease a vehicle. Nowadays, leasing is exploding in popularity. It's also become more accessible to people with imperfect credit, but it is still difficult to qualify.
All of the leasing offers you hear about in advertisements — you know, the ones that sound too good to be true — are reserved for consumers with great credit or those who are brand loyal.
Similar to car loans, leasing is done in tiers. Applicants qualify for certain tiers based on their credit score and many other factors. These include the leasing company and their requirements, the vehicle in question, your down payment, your income, your recurring debt, and more.
Once your credit score dips around or below the 600 range, it becomes more difficult to get approved for a lease. However, there are exceptions. Because of all of the factors involved, there is no way to put a hard-and-fast number on a minimum credit score needed to lease a car.
Regardless, if you have bad credit and are approved for a lease, the terms will not be the best. You will still face the required taxes and fees, but you'll pay more in interest and typically will be required to make a security deposit. You may even need a down payment in addition to a security deposit.
What You Should Do Before Applying
If you have imperfect credit and still want to explore leasing, there are some things you should do to put yourself in a better position to succeed.
- Check Your Credit In Advance
Your credit plays a key role in whether or not you are able to qualify. It's best to check your credit reports well before you begin lease shopping. If you do it more than a month in advance, this gives you time to dispute and fix any errors you may find. You should also get at least one of your credit scores to get an idea of where you stand.
- Examine Your Budget and Adjust Your Vehicle Options Accordingly
You'll also want to get your budget in order. It will be easier to get approved to lease an affordable vehicle that keeps you well within your budget. This is because your debt to income ratio and payment to income ratio have a big influence on your approval chances. Learn more about those factors here.
- Have a Security Deposit Ready
If you have bad credit, you can expect to be asked to pay a security deposit. In fact, lenders can require you to make multiple security deposits. It is also not uncommon to be asked for the first month's payment up front. Not only that, but you may also be asked for a down payment (called a cap cost reduction in leasing) in addition to everything else.
- Shop Around for a Lease, Not a Car
Leases are largely controlled by the finance arms of automakers. For example, Ford Motor Credit does most of the leases for Ford vehicles. Each manufacturer will have different requirements, so you should explore several brands. Some, such as Kia, are known to be more willing to accept applicants with lower credit scores.
The Bottom Line
There's no way to know the exact minimum credit score needed to lease a car because of the many factors involved. However, it is much more difficult to get approved for a lease if you have bad credit.
Instead, if you have poor credit and need a car, you may want to explore a subprime auto loan. A bad credit car loan is much easier to get approved for, and gives you a chance to build your credit while solving your transportation needs.
Auto Credit Express helps people dealing with credit issues get connected to local car dealerships that specialize in getting people in unique credit situations financed. We can help you next if you simply complete our free and easy car loan request form.