It’s possible to lease a car with bad credit, but it’s not common. Even if a leasing company offers bad credit leases, they may require additional cash up front. This is called a security deposit, and unlike an auto loan down payment, you get it back at the end of the lease.
Bad Credit Leasing Qualifications
Generally speaking, leases are reserved for consumers with good credit (a FICO score of at least 660). However, some major car manufacturers, such as Kia, offer lease deals to those with less than perfect credit.
If you’re considering leasing, do you know what it takes to get approved with bad credit? If the leasing company is willing to work with you, you’re probably going to need these three things:
- Proof of income – A recent computer-generated pay stub showing year-to-date earnings, or recent tax returns and bank statements if you’re self-employed or an independent contractor.
- Proof of residency – A recent utility bill in your name showing the address listed on the application.
- Security deposit – When you lease, you have to make the first month’s payment plus title and license fees up front. If you have bad credit, the lessor may require a security deposit to make sure you’re serious about successfully completing the lease.
Keep in mind that when you decide to lease with bad credit, your interest rate is most likely going to be higher than average. This is something that you're going to want to factor in to your budget.
Financing May Be a Better Option
Leases tend to come in tiers – the better your credit score, the more likely you are to qualify for the best lease deals. If your credit is too poor for the lowest leasing tier, you’re not completely out of luck for getting a vehicle. Instead of leasing in this case, you may want to consider financing your next car for now, improving your credit over time, and leasing a vehicle the next time around.
You may not get that brand new model you’ve been eyeing, but taking out a bad credit auto loan on a reliable, affordable car can give you the chance to improve your credit score so you can lease the vehicle you want in the future. It’s going to take some time, depending on where your credit currently stands, but each on-time payment is a step forward.
The Bottom Line
While it's less common, it is possible to lease a car with bad credit. However, you may have to put money down in the form of a security deposit for a lessor to approve you. At the same time, leasing may not be in the cards right now, and that’s okay, because you have the option of financing a vehicle and improving your credit score.
Whether you’re looking to finance or lease your next car, The Car Connection wants to help you find a dealership to work with. Simply fill out our auto loan request form today, and we'll get to work connecting you to a dealer in your area!