When you’re faced with the decision to lease or buy your next car, your credit score can make a big impact on your choice. If your credit score is worse for wear, it’s worth your time to look into financing a vehicle instead. You may have a higher chance of an auto loan approval than you think.
Is Leasing Possible With Bad Credit?
Bad credit can make getting approved for a car lease difficult. Most leasing companies have high credit score requirements, so it's harder to lease a brand-new vehicle with a lower credit score. This is exactly why a bad credit auto loan may be more your speed when your credit score could use improvement.
That’s not to say that leasing is impossible with bad credit, but it’s just not that likely. If your heart is set on leasing a new car every few years, you may need to build a good credit score first and look into leasing later. And financing a vehicle with a bad credit auto loan is a good route to take to get you started.
Start With a Subprime Auto Loan
If you need to improve your credit score with a car loan before you qualify for leasing, consider working with a subprime auto lender. Bad credit car loans are a great way for borrowers to start their credit history or improve their existing history.
Auto loans are installment loans that typically last anywhere from 48 to 96 months. If you manage to make every car payment on time on a subprime auto loan, it can do wonders for your credit score. The biggest factor in your credit score is your payment history, making up 35% of your overall score.
Remember that a better credit score helps your chances of getting approved for better interest rates, too. A lower interest rate means saving money when you take on credit because borrowing costs money, so keep your credit score in mind always (not just when you need it). Not only does a better credit score improve your chances of getting approved for financing/leasing in the future, but it can also save you money when you need to take on credit.
Why Your Credit Score Matters in Both Leasing and Buying
Your credit score makes a large impact on your ability to get new credit. That three-digit number serves as a snapshot of your credit history, which is your record of how you’ve handled repaying past credit and other areas of your finances.
A credit score below around 660 is usually considered bad credit by most lenders. The lower your credit score, the lower your chances of getting approved for the best interest rates and car deals. Many traditional auto lenders and leasing companies may turn you down for financing with a bad credit score – so you may not just get rejected for the best deals, but financing as a whole.
You shouldn’t just improve your credit score because you want a lease, though.
An improved credit score can mean getting approved for better rates in all other types of credit, such as revolving credit like credit cards, and installment credit like mortgages and car loans. Whenever you want to borrow money to get a big-ticket item, your credit score is probably going to be considered in the final decision, so it’s worth it to improve it.
Need Help Finding the Right Car Dealership?
Subprime auto loans can be a great way to get the vehicle you need while repairing your credit. While most traditional lenders may turn you away for financing because you have a lower credit score, subprime lenders look at more factors to determine your eligibility.
If you’re not sure where to start looking for a special finance dealership, begin with us since you’re already here at The Car Connection. Over the years, we’ve amassed a nationwide network of dealers that are signed up with subprime car lenders. Get matched to one in your local area after you complete our free auto loan request form.