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How to Lease a Car Online with Bad Credit
If you have less than perfect credit, leasing a car can be very difficult, but all is not lost. Learn a few simple tips how to lease a car online with bad credit Leasing a car is an affordable way for many drivers to get behind the wheel of a new car because the monthly car payment on a lease is often less than if you bought the same vehicle outright.
However, just like a car purchase, you must qualify for a car lease. If you have bad credit, you may be unable to lease a car. If you are leasing a car with bad credit, consider all factors and alternatives before applying.
What’s the Minimum Credit Score Required to Lease a Car?
The credit score required to lease a car varies depending on the dealership. Most dealerships require a minimum credit score of 620; anything less is considered subprime.
Although most dealerships prefer a score of 700 or higher, you may still be able to obtain a leasing offer.
The better the leasing offer you will receive, the higher your credit score. With a credit score of 670 to 739, you can still expect a good leasing offer.
The lower your credit score, the less likely it is that you will receive a good leasing offer, if one at all.
When evaluating your lease application, dealerships will look at more than just your credit score. They will also consider your current income, work history, and current debt obligations.
Things to Know to Lease a Car Online with Bad Credit
Taking steps to improve your credit score will benefit you in the long run, but you can still lease a vehicle before repairing it — just be aware of these potential pitfalls.
Expensive – If you have a low credit score, you may need to do more to qualify for a leasing agreement.
For example, the dealership may require a larger down payment up front. In addition, your lease offer may include a higher interest rate, which is referred to as a “money factor” or “lease factor” in leasing terms.
This may raise the cost of your monthly lease payment above what your budget allows.
Restriction on vehicles – Leasing a car has limitations similar to renting a car, such as annual mileage limits.
When the lease term expires, you must return the vehicle, and if you exceed your allotted mileage, you must pay a per-mile fee.
In the end, you will have no equity in the vehicle, which means you will have no trade-in or monetary value to apply to the purchase or lease of a new vehicle.
Ways to Increase Your Chances of Getting a Lease
If you are determined to lease a vehicle despite having bad credit, there are a few things you can do to increase your chances of approval.
Put down a deposit – It is a good idea to make a down payment to demonstrate to your potential lender that you are committed to paying off your lease. This is known as the capitalized cost reduction.
The more money you put down at the start, the lower your monthly payment will be. Prior to applying for a lease, try to save up a larger sum.
Obtain a co-signer for your loan – Obtaining a co-signer is another way to gain approval. A lease co-signer provides the lessor with an additional layer of security.
If you do not pay, the co-signer bears equal responsibility for the lease and will have their credit affected.
If this is your preferred option, make sure to select a trusted family member or friend with a better credit history than you.
Reduce your debt-to-income ratio – Having the intent to reduce your debt-to-income ratio is also a plus for lessors.
Your debt-to-income ratio, or DTI ratio, is calculated by dividing your monthly payments by your monthly income.
As someone with bad credit, you should try to lower this number. To factor this number, use a debt-to-income calculator.
Look around – When looking for a car lease, shop around to see which dealership offers the best deal to customers with bad credit. Given that each dealership evaluates lease offers differently, you may receive a more favorable lease offer than you anticipated.
Alternatives to Lease a Car Online with Bad Credit
If you are unable to obtain a lease or one with favorable terms, a lease transfer may be an option.
Companies such as SwapALease.com and LeaseTrader.com specialize in matching people who want to get out of a lease with those who want to get into a lease.
While lease takeovers still require a credit check to qualify, the terms may be more favorable because no down payment is required.
Leasing a used car is another option. Leasing used cars is not something that all dealerships provide, so you may have to look around to find a dealership in your area that does.
If you do, make a note of all the terms and the total amount you will pay over the lease’s term. You might be able to get a better deal if you buy a used car.
In conclusion
Although you can lease a car online with bad credit, you may receive a lease offer that is less favorable than you expected.
This may imply a larger down payment, higher monthly payments, or leasing a vehicle that isn’t your first choice.
If you have the time, improving your credit score could lead to a better lease agreement in the future.