Can You Refinance a Car Lease?

Because leasing is a form of financing, you can refinance your leased vehicle once it’s completed. Choosing to refinance is just one option you have when the lease is up. If you end up liking the leased car, you can also buy it outright, sell it, or even lease again.

Options at the End of a Car Lease

Even though you don’t own the vehicle when you lease, you can refinance it when the lease is up, which is one of four options you have to choose from:

  1. Can You Refinance a Car Lease?Transfer your lease – If your lease is not yet finished, but you don’t want to continue leasing, some lessors allow you to transfer it to someone else before it's up. The new lessee must meet the leasing company’s qualifications, and you may have to pay a transfer fee.
  2. Buy the car – If you like the vehicle and you want to keep it or sell it yourself, you can choose to refinance it or buy it outright at the end of the lease term. You can also either sell it to a dealership or a private party once you own it.
  3. Return it and lease again – Once the lease is completed, you can turn in the car and lease a new one. You can often avoid paying a termination fee on the old lease if your new one is with the same leasing company.
  4. Lease pull-ahead – If you’re currently near the end of your lease, lessors sometimes offer lease pull-ahead programs, which lets you skip the last few payments if you lease a new vehicle from the same company. You can usually avoid paying a termination fee, although you typically can’t avoid paying a penalty if you’re over on miles.

Can I Lease a Car with Bad Credit?

Leasing is generally reserved for consumers with good to excellent credit, but in some cases, you may be able to get approved for leasing with less than perfect credit. It depends on the leasing company and their programs at that time. If approved, you can probably expect to provide documents such as:

  • A recent utility bill, in your name, for the address listed on the application to serve as proof of residency.
  • Your most recent computer-generated pay stub showing year-to-date earnings to serve as proof of income.
  • A list of six to eight personal references with names, addresses, and phone numbers.

In addition to these documents, you may have to come up with one or more security deposits on top of an upfront payment that includes the first month's payment plus title and license fees. In addition, the interest rate you’re likely to qualify for is probably going to be higher than average, although this can vary by lessor.

The Bottom Line

Leasing is great if you want to drive a new vehicle every two to three years. If you want a lower payment, you could lease a more affordable car the next time around instead of refinancing. Keep in mind that not only is it difficult to qualify for a lease when your credit is suffering, but your interest rate is going to be higher than average if you do qualify.

While we can’t help with leasing, The Car Connection can help you get connected to a dealer that can get you behind the wheel. We'll work to connect you to a local dealership that knows how to help consumers in unique credit situations if you fill out our secure auto loan request form.

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