Can You Lease a Car With Bad Credit?

What Does Leasing a Car with Bad Credit Involve?

Even though leasing a car may seem like a better deal than an auto loan on the surface, this isn't always the case. It's true that leased vehicles typically carry a lower monthly payment than their car loan counterparts. If you always want to drive a new vehicle or want to have the latest bells and whistles in your car, leasing could be appealing.

However, because lease cars are new vehicles, the starting price is often higher than it would be on other cars, such as used or certified pre-owned vehicles. If you're leasing a car for 36 months, which is more expensive than one you could buy with a loan in 60 months, you're probably not saving too much cash by having a lower monthly payment.

Additionally, since a lease approval is typically based on your credit score, a credit-challenged consumer may not be able to find a lessor willing to work with them, since available credit and overall financial stability are big factors in leasing.

Then, when your lease is up, you either have to start the process over and lease again or purchase the vehicle for its pre-calculated residual value. Also, there are the extra costs associated with leasing that may tip the scales out of favor with bad credit borrowers.

Can You Lease a Car with Bad Credit?

Here are a few things you have to keep in mind if you have a problem with credit and you're thinking of leasing:

• Your lease will not be at the low advertised rates you see on TV.
• You may not qualify for a top-of-the-line vehicle.
• Bad credit borrowers typically need to pay a security deposit on top of a down payment.

If you qualify, you should also be aware of the limitations that are a part of leasing:

• Leases come with mileage limitations. Do you drive a lot of miles? You'll want to add those miles into the lease upfront. Otherwise, you could find yourself with a hefty bill when you turn the car in.
• Do you take care of a car? Answering "no" means leasing isn't for you. Turning in a car at lease end that has more than normal "wear and tear" means you'll be charged the cost to repair any excess damage.

If those concerns don't bother you, you'll find that leasing a vehicle is a great way to stay within your budget and build your credit while driving a new car.

Qualifying for a Lease with Bad Credit

Not all lessors offer leasing programs to lessees with tarnished credit. Those that do will offer what is called "lower-tier leases". The great $199-a-month "Sign and Drive" leases are typically only available to consumers with the best credit scores.

If you have fair credit and you do qualify for a lease, it will likely be at that lower program tier. This means a more expensive lease with a higher money factor, and it may require a security deposit or two in addition to the typical fees and the first month's payment upfront.

What to Expect During the Application Process

The application process for a lease vehicle is similar to that of a loan. After you've done your homework and found the vehicle you want to lease, you need to go to the dealership, where you will have a credit check and income verification done, and then you will either be approved for a lease or denied.

If you're approved, you need to review the lease terms and make sure you're okay with the length of your lease (typically 24 to 36 months), your monthly payment, and your mileage limit. Then provide your driver's license, proof of full coverage insurance, and any other required documents, sign the lease, and take delivery of your vehicle.

Challenges of Leasing a Car with Bad Credit

Unfortunately, bad-credit consumers can run into issues qualifying for a lease due to the higher credit score requirements. Most leases are issued to borrowers with good credit scores.

Leasing companies are typically only allowed to lease out brand-new vehicles, so they may not offer a lot of wiggle room for those with credit issues.

Leasing companies tend to have high credit score requirements for their vehicles. Those with credit scores in the bad credit range may not qualify for a car lease, and they tend to have better luck in getting approved for a bad credit auto loan instead.

Generally, most lenders consider borrowers with a credit score below around 670 as having bad credit. Borrowers with credit scores below 700 are considered “subprime” by the credit bureau Experian.

In the second quarter of 2025, subprime borrowers accounted for 21.42% of leased vehicles, according to Experian. This is down around 3.60% year-over-year, indicating that leasing with bad credit remains challenging but not impossible. Borrowers with credit scores below 500 only accounted for 0.27% of leased cars.

Bad credit borrowers don’t have the best odds when it comes to getting approved for a vehicle lease, but some do occasionally get the go-ahead. However, with a lower credit score, it usually means paying more for the car.

Higher Interest Rates

Interest rates on a lease are known as the money factor, and just like with buying a vehicle, leasing with poor credit often means more cost to you.

Additional Fees

Unlike typical lessees, bad credit lessees may be required to put down more money in the form of a security deposit or multiple security deposits. This is often in addition to the down payment you're also required to pay.

Mileage Limits and Wear and Tear

All leases come with mileage limits and wear and tear limitations. If you go over your allotted miles, you could be charged as much as $0.25 per mile. That can really add up fast depending on how much you drive.

Wear and tear fees will vary depending on the condition of the car when you return it. If it's in great condition, you may not have extra fees, but should anything be wrong, like a stained seat or a broken knob, you will be charged.

This is because lease vehicles are typically refurbished and sold as certified pre-owned vehicles.

How to Improve Your Chances of Leasing a Car with Bad Credit

Leases are typically reserved for consumers with good credit, so the likelihood of getting approved to lease a car with bad credit 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 information.

Providing Documentation

You will typically be required to provide documents, much like getting a bad credit car loan. These include:

• 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.

Securing a Co-Signer

Additionally, like with a loan, you may be able to lease with the addition of a co-signer. This means having someone with good credit go in on the lease with you so that if you miss a payment, the lessor has someone to fall back on.

The requirements for being a co-signer include having good credit and having enough verifiable income to take on the lease.

Is Leasing a Car with Bad Credit Worth It?

Leasing a car isn't always worth it in a bad credit situation. Mainly, this is because the lease is short, and your credit may not improve enough over the course of your loan to give you an advantage when you need to lease again. This is why many people recommend borrowing for a car loan with tarnished credit instead.

Subprime lenders specialize in assisting borrowers with credit challenges, whether it be bankruptcy, no credit, or just a lower credit score. Subprime financing allows borrowers to buy a new or used car, depending on their income and stability. If you can meet the requirements of a subprime lender, then you could also have a shot at credit repair, too!

Subprime lenders report loans to the national credit bureaus. A reported loan means the timely payments are reported, which allows you to improve your credit score. Payment history is the most important part of your credit score, so making sure the things you pay on are reported is key to repairing your credit.

With an improved credit score by taking on new credit that you can comfortably handle, you could be meeting a leasing company's requirements next time you need a vehicle.

The Bottom Line

By ordering all three credit reports and at least one credit score before beginning the car shopping process, applicants will typically know beforehand which type of auto loan or lease they can apply for.

Subprime car lenders are signed up with some special finance dealerships, and these lenders work with bad credit borrowers who've gone through bankruptcy, past vehicle repossession, or those who are new borrowers with no credit history.