How to Lease a Car With a Low Credit Score

A low credit score affects many of your financial decisions, including leasing a car. A car dealership usually sees a score of 680 or lower as high risk and may label you as a subprime borrower. This label may make it more difficult to lease a vehicle. If you are looking at leasing a car and you have a low credit score, you have to be prepared at the car dealership.

    Determine your credit score. If you are not sure where you are, get a free credit score report (see resources) and find out where you are with your credit.

    Raise your credit score. Do what you can do raise your credit score before you lease. This may include paying bills on time, reducing debt, opening new accounts and increasing the amount of time you have had bills in your name.

    Save up for a large down payment or security deposit. Often, car dealerships will require a larger down payment (as much as 20 percent of the total lease contract) for lessees with low credit scores. You may also get stuck with a higher interest rate.

    Find a co-signer. It may be easier to get a lease if someone with a high credit score is willing to co-sign on your lease. Be wary of this option, however, because if you can’t make payments, your co-signer will need to pick up the slack.

    Find out which car companies are doing the best by reading the Wall Street Journal or checking out the stock values. Car manufacturers that are financially sound will be more likely to risk leasing to someone with a low credit score. Similarly, those manufacturers that aren’t doing as well are more likely to be cautious.

    Make sure you have enough money to make payments on time. Defaulting on your lease can wreak havoc on your credit and cause repossession. If you find yourself in a position where you can no longer make payments, contact your leaser immediately. You may be able to negotiate a deal to keep your vehicle and your credit score intact.

Tips & Warnings

  • Consider your options: If your credit score is low because you are in a lot of debt, consider buying a “junker” car to get you by until you can afford a nicer vehicle.

  • Having someone co-sign on your lease may cause difficulties in your relationship if you are unable to pay.
    Leasing a vehicle you cannot afford is likely to eventually lower your credit score even more and make you more in debt.

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