If you are in the market for a new car, you may want to consider leasing because it can improve your credit score to lease a car. When handled correctly, a lease can be a good way to boost your credit score if you are not quite ready to take out an auto loan to buy a car.
The minimum credit score to lease a car is lower than the requirements for an auto loan, so a lease can be a good option for certain consumers with spottier credit histories. Keep reading to learn more about the general requirements to lease a car and how leasing can affect your overall credit score.
Many people who are struggling to secure a car loan wonder, “can you lease a car with bad credit?” In short, the answer is yes.
While you may not get the most optimal terms or the widest variety of vehicles to choose from, you may still be eligible for a lease with a bad credit score.
Generally, borrowers with a subprime credit between 500 to 620 will be eligible, but it will be harder for them to find the ideal lease for their circumstances.
With bad credit, it’s harder to secure a lease on newer and more reliable vehicles. Typically, consumers with bad credit scores will have to choose a certified pre-owned (CPO) vehicle to lease.
If you are interested in signing a lease but you have bad credit, here are some steps you can take to improve your chances of approval:
- Make a larger down payment – Paying a larger down payment can reduce the risk a lender takes on when giving you a lease. This will give you a better chance of meeting a dealership’s car leasing credit requirements.
- Consider getting a cosigner – If you cannot find a dealership that will give you a lease on your own, a cosigner with good credit can help you get approved. A cosigner will agree to make your payments if you are unable to do so.
- Improve your debt-to-income (DTI) ratio – If you have a high amount of debt in relation to your gross monthly income, then you have a high debt-to-income ratio. By paying off some of your debt you can lower your DTI and increase your chances of getting a lease.
While you may be able to secure a no credit check lease, they typically come with less favorable terms than those offered to consumers with good credit.