Leasing a car allows you to drive a newer model for a certain number of years with lower monthly payments and lower upfront costs. However, the process isn’t as simple as walking into a dealership and picking out a vehicle. You need to qualify for leasing first, which can be a hurdle if you have bad credit.

Because credit scores play a significant role in the leasing process, having bad credit can make it more challenging to lease a car. It can also affect the terms of your lease. Ultimately, the decision to lease a car with bad credit should be made after carefully considering your financial situation, your vehicle needs and the lease agreement terms.

Leasing a Car With Bad Credit

Leasing a car can offer several benefits, particularly for those who prefer to drive newer models without the long-term commitment of ownership. When you lease, you're essentially renting the car for a set period, usually two to four years. This often results in lower monthly payments compared to buying a car since you're only paying for the depreciation that occurs during the lease term.

According to the Experian State of the Automotive Finance Market report for the first quarter of 2023, leasing remains a low yet consistent option for consumers, even though overall financing for new vehicles has decreased. This suggests that while leasing is not the most popular choice, it continues to be a significant part of the automotive finance market.

As with any financial agreement, leasing a car requires a credit check. Leasing companies use this to assess your risk level. That means the higher your credit score, the less risky you are. On the other hand, if you have bad credit, leasing companies may perceive you as high risk, which can impact the terms of your lease.

The Minimum Credit Score Needed for a Lease

While there's no universally set minimum credit score requirement for leasing a car, a higher credit score can make it easier to secure a lease agreement and may result in more favorable terms.

According to Experian's report, the average credit score for a new car lease in the first quarter of 2023 is 736. Over half of the leasing is done by prime score borrowers with a credit score of 741 or higher. Prime scores range between 661 and 780. Scores from 601 to 660 are considered nonprime, while scores from 501 to 600 are considered subprime.

If you have bad credit, securing a lease can be more challenging but not impossible. However, expect higher interest rates or a larger down payment requirement.

Factors To Consider When Leasing a Car With Bad Credit

Before heading to a dealership, it’s essential to consider the potential drawbacks of leasing a car if you have bad credit, such as higher costs and limited lease options.

High Costs

Although leasing a car lowers monthly payments, having a bad credit score can subject you to less favorable terms that significantly increase your expenses. For instance, the dealership may require you to make a larger down payment. Alternatively, they may charge a higher interest rate, also known as the “money factor” in leasing terms. If you can get a lease approval with bad credit, be prepared to pay a higher cost, plus other fees associated with leasing a vehicle.

Limited Options

Not all dealerships are willing to work with individuals with bad credit. This means you may have to spend more time shopping around to find one willing to work with your credit situation. And once you do, expect your choices of vehicles to be limited. Dealers may be less inclined to lease higher-value cars to individuals with bad credit, limiting you to older or less expensive models.

Ways To Improve Your Chance of Lease Approval

It's not impossible to lease a car with bad credit. However, it might require more effort on your part, such as finding a co-signer with good credit to help secure the lease or saving for a larger down payment.

  • Find a co-signer: Having a co-signer can improve your chances of securing a lease. The co-signer essentially agrees to take on the responsibility of the lease if you're unable to make the payments. If you go this route, ask a trusted family member or friend with stronger credit than yours.

  • Save for a larger down payment: As a general rule, the more money you provide in a down payment, the less you have to pay in monthly installments. Saving for a larger down payment can help offset your risk to the dealer and may increase your chances of getting approved for a lease.

  • Shop around: Each lending company has unique lease approval criteria. Don't be discouraged if one rejects your application. Shop around and explore different options to find one that's willing to work with your credit situation.

Alternatives To Leasing a Car With Bad Credit

If you have bad credit and are finding it difficult to lease a car, here are some alternatives worth considering:

Buy a Used Car

Purchasing a used car is often more affordable than leasing a new one. Used cars have already undergone a significant portion of their depreciation, which is the loss in value that occurs over time. You can often get a good deal on a used car, especially if you're willing to drive an older model.

Before buying a used car, it's important to have it inspected by a trusted mechanic to ensure there are no hidden issues.

Get a Lease Transfer

If you’re having trouble securing a lease, consider getting a lease transfer, also known as a lease swap. This process involves taking over a vehicle lease from the current lessee.

In a lease transfer, the current lessee transfers the remainder of the lease agreement to another person — the lease transferee. They will be the ones to make the remaining payments on the lease and adhere to the terms of the original lease agreement, such as mileage limits and wear-and-tear guidelines.

Lease transfers are often facilitated through third-party companies that specialize in lease swaps like SwapALease or LeaseTrader. These provide platforms where individuals looking to exit their lease can connect with individuals interested in taking over a lease. It’s worth noting, however, that they still require a credit check to qualify. In most cases, your credit score needs to be similar to the original lease owner.

Consider Dealerships With In-House Financing

Some dealerships offer in-house financing for car leases. Known as “lease here, pay here” (LHPH) dealerships, they focus on individuals with bad credit or no credit history.

At an LHPH dealership, you select a car from their inventory and arrange the lease directly with the dealership. They set the terms, including the lease rate and payment schedule. Payments are often due weekly or bi-weekly and may need to be made in person. The vehicles available are typically used and may be older or have higher mileage.

Note that LHPH dealerships often come with higher lease rates due to the increased risk they take on by leasing to those with bad credit. As such, it’s best to read the fine print before signing the dotted line and consider this option as a last resort.

Frequently Asked Questions

We answered some frequently asked questions to help you determine if leasing a car with bad credit is the best option for your particular situation.

Yes, leasing a car with bad credit is possible, but it can be more challenging. Leasing companies often check your credit score as part of the application process, and a lower score can make it harder to secure a lease. However, there are strategies you can use to improve your chances, such as saving for a larger down payment, getting a co-signer or shopping around.

If you have bad credit, leasing a car can have several downsides, including higher interest rates, larger down payments and limited vehicle choices. It can also be more challenging to get approved for a lease.

While the leasing company often sets the terms of a car lease, you may have some room to negotiate. For example, you might be able to negotiate the price of the car, the length of the lease term or the mileage limit. However, remember that bad credit could limit your negotiating power.

Don't be discouraged if you get rejected for a car lease because of bad credit. Consider taking steps to improve your credit, such as paying down debt, making all your payments on time and applying only for the credit you need.

Yes, there are several alternatives to leasing a car if you have bad credit. These include buying a used car, getting a lease transfer and considering dealerships with in-house financing.

Whether it's better to lease or buy a car when you have bad credit depends on your personal circumstances. Leasing can often result in lower monthly payments, but securing a lease with bad credit can be harder. Buying a car, especially a used one, might be a more feasible option if you have bad credit. However, you'll likely face higher interest rates on an auto loan.

About Christopher Boston


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Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.

Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.


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Shield Insurance

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