car leasing bad credit

Leasing a car with bad credit, is it possible?

Leasing a car allows you to drive the latest models and lower monthly payments. However, having bad credit can make it difficult to get approved. If you have bad credit, alternative car leasing methods may make more sense, since monthly lease payments can get expensive.

Leasing a vehicle may seem like a great option if you are looking for a newer-model and lower monthly car payments. But, if your credit history is less-than-perfect, it can get expensive.

Lease agreements can be expensive, especially if you do not have good credit. You may be stuck with higher interest rates than a typical car loan. In addition, you may be responsible for expensive car repairs and routine maintenance.

If you have a poor credit score, but are dead-set on leasing a car, there are a plethora of things that should be considered. 

Credit score requirements to qualify for a car lease

Leasing, like with auto loans, requires a credit approval process. Car dealers and leasing companies will check your credit history and credit report when you apply for a lease.

Car leasing with bad credit can be difficult, but not impossible. Currently, the average credit score for eligibility depends on the type of vehicle purchase you are trying to make. According to the Experian State of the Automotive Finance Market report data from the second quarter of 2020, the average credit score to qualify for a lease was 729, 718 for new car financing and 657 for used car financing. 

The differences in scores for each category can be equated to the increased risks car dealerships face when they lease out their cars. This is due to the way automotive leases operate. 

During a lease term, the dealership receives payment equal to the car’s expected depreciation, as well as a rent charge and other fees. This means that the leasing company takes on this risk. Cars can lose value faster than originally anticipated due to excessive wear and tear, damages and extra miles. When you buy a vehicle, instead of leasing one, you are taking on depreciation risk, not the car dealership.

Handsome young man photographing automobiles in car dealership

What should you consider when leasing a car with bad credit

When you are looking to lease a car, it is important to consider a few things. 

High financing costs

Similar to APR, leases charge something called a “money factor” or “lease factor/rate” expressed as a decimal fraction. The money factor is used to determine your cost of financing.

This is just one of the factors in the application process. Remember that low credit scores usually means higher finance charges.

“Lease-here, pay-here” dealerships

“Lease-here, pay-here” dealerships may seem tempting if you have already been rejected from other leasing companies. 

Often, these types of dealerships offer leases on used cars, but they can be quite costly. As the dealership will receive compensation on a timed payment plan from you on a weekly or biweekly basis, on top of high rent charges and no coverage on repairs.

Only consider these dealerships if you are in desperate need of a vehicle and have exhausted all other avenues. If you can wait, working to improve your credit score and saving money will provide you with better options for car leasing in the long run. 

How to improve your chances of lease approval

Before applying, here are a few things that can be done to increase your chances of approval.

Down payments

One of the best ways to improve your chances of getting approved is to put money down on the lease.

Save money ahead of time so you have the largest down payment possible. Putting money down will lower the amount of your lease and decrease your monthly payments. It may even improve your chances of attaining a lease. Keep in mind that many companies have a cap on how much money they will accept as a down payment.

Debt-to-income ratio

Lowering your debt-to-income ratio, or DTI, is a great way to improve your chances as well. It is a calculation that equals your monthly debt payments divided by your monthly gross income. A lower debt-to-income ratio is usually preferred by lenders. DTI is used to determine if you will be able to make your monthly payments.


If you have family members or friends with an excellent credit history, consider inquiring to  them about co-signing your lease. Co-signers can help to reassure the dealership that all payments will be made on time. Co-signers are  also held responsible if you fail to pay the leasing company on time. Failure to make payments will not only impact your credit score, but theirs as well. 


Leasing may not be the best option for your lifestyle. In addition, it may make sense to try and rebuild your credit. We can help you retake control of your credit.

Taking over a lease

Taking over someone else’s lease, or a “lease swap” can have better chances of success if your credit history is poor. One the lease transfer is initiated, you are responsible for the remaining payments and fulfilling the terms of the lease. 

There are many online sources to help you find lease-transfer options. It is important to note that you must have similar credit to the original lease owner in order to qualify.

Less expensive vehicles

Consider purchasing a lower-priced automobile. Used cars often mean you have less to finance and will decrease interest rates. Sometimes, qualifying for a used-car loan is easier than qualifying for a lease if you have bad credit.

Dealerships with special financing departments

Some dealerships have special finance departments. Car dealerships like these are great if you are dreaming of a newer vehicle. These dealerships have a focus on helping people with not-so-great credit to get an auto loan or lease. However, loans from these types of dealerships will often have high interest rates if your credit score is already low. 

You can also utilize credit cards to cover some of the expenses of a down payment and utilize some intermittent lower offers for fixed periods of time. 


If you do have a poor credit history, it can be very difficult, if not impossible, to get approved for a lease. If, by chance, you are approved, the costs can be extraordinary, with high upfront costs and very high financing chargers. In addition, other fees are often hidden, such as car repairs and maintenance. 

If you can afford to wait until you can save money or are in a better financial situation, it is beneficial to do so. It will crease your chances of approval and lower the costs to you. Start by rebuilding your credit and maintaining a steady, reliable credit history. Make sure you review any advertiser disclosures before committing to a financial product. 

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