Car leasing has grown popular in most parts of the world, including the USA, as people choose to lease instead of buy. For many customers, a car lease is a more economical option to get behind a valued set of wheels. If you find leasing more suitable to your lifestyle and budget, the next most important thing to focus on is your credit score. Check out eAutoLease.com to find out what credit score is needed to lease a car and how to improve your credit score for quick approval and easy payment options.
If you are planning to get a new car, you must know that credit score can impact your chances of getting approved for a lease. Even though the credit score necessary to lease a car varies by the dealership, having the required minimum credit score is essential. With a good credit score, you are likely to get approved for leasing from most dealerships.
Some companies may lease even with a lower credit score depending on the vehicle cost, down payment, and other credit or contract terms. It is best to review your credit report before applying for a lease. Knowing your credit history not only gives you an idea of how lenders may perceive you but also gives you a chance to work on it and boost it to get a new lease easily.
Read more: Leasetrader vs. Swapalease (Lease Transfer Guide)
How Credit Score Impacts Your Car Lease?
A credit score has a significant impact on your car lease. A good score can help the application process run smoothly.
With a low credit score, you may get approved for the lease, but chances are you will pay more on the down payment and the lease payments. It is because you are considered a credit risk by lenders and will pay more interest. In terms of additional monthly costs, it could be as little as $10 or as much as $215, depending on how the lender and the dealership assess your borrowing risk.
If the dealer believes you are too risky based on your credit score, you might not even get approved for the lease. You must work towards improving your credit score as much as possible to get a lease without any problem.
What Is Considered a Good Credit Score for Leasing a Car?
Credit scores range from 300 to 850, with 300 being the worst and 850 being the best possible score. Customers shopping for a vehicle with a credit score anywhere from 670 to 850 are classified as prime and considered low risk.
The exact credit score you need to lease a car varies from dealership to dealership as well. With a score above 680, you are likely to receive appealing lease offers. According to experts, a score of 700 may be sufficient to help you lease a car, but a higher score is certainly welcome and gets you in the right places. People with lower scores are not out of luck entirely, but they may not have the same variety of choices, have less favorable lease terms, and require more cash to get their hands on the vehicle they want.
The higher credit score you have, the easier it becomes for you to walk away with a deal. A few months of paying down a debt and on-time bill payments can help you achieve the credit score needed to lease a car on your terms.
Is It Possible to Lease a Car With a Low Credit Score?
Yes. It is possible to lease a car with a low credit score, but it may cost you more money upfront and in the long run as well. Lenders and car leasing companies use credit scores to assess the borrower’s risk. Charging high-risk borrowers more can help lenders mitigate potential losses.
A lower credit score limits your options when it comes to choosing your new lease vehicle. If you want to go for a specific make and model, improving your credit score before applying could help you lock it down too. It is not easy to pinpoint the lowest credit score needed to lease a car as individual experiences vary from lender to lender and state to state.
If your lease is approved, you can use it as an opportunity to boost your credit score, which may give you more leverage when it comes to upgrades. All you need to do is stay on top of your payments. Lease payments are reported to the major credit bureaus in the same way as finance payments. Timely bill payments are the strongest factors that influence your credit score, which positively affects your overall credibility.
Also, if you are looking forward to saving on monthly payments and overall lease costs, consider making a capitalized cost reduction or down payment. It is a lump sum payment made at the beginning of your lease to reduce the amount you are financing under the lease.
Read more: Documents You Need When Leasing a Car
Pros and Cons of Leasing a Car
Leasing a car comes with several pros, but you must focus on its downsides before signing the dotted line. Being aware helps you make an informed purchase and avoid stress afterward.
Pros of Leasing a Car
- You can enjoy the pleasures of driving a new car for less than it would cost you to finance a used one as your payments cover the cost of depreciation rather than the vehicle’s principal.
- With regular maintenance included in the warranty, it means less trouble in the long run.
- As most people prefer to lease new vehicles, it requires minimal maintenance to keep the car in good shape.
- You also have the option to buy, upgrade or try something new after a few years, which is an attractive offer.
- You won’t have to go through the hassle of finding a buyer for your vehicle when you are ready for a change. Leasing gives you a chance to drive the vehicle of your choice in terms of innovation and technology.
Cons of Leasing a Car
- The biggest drawback of leasing is that you do not own the car. Payments you make every month go to the leasing company instead of building equity.
- A car is a valuable asset, but when you lease, you miss out on the valuable opportunity to own it.
- Leasing one car after another may cost you more in the long run as the payments will continue for as long as you lease. On the contrary, when you purchase a vehicle with financing, the payments come to an end once you have repaid the financing.
- When you lease a car, you must keep it under a certain mileage limit and conditions to avoid costly penalties.
What to Do if I Have a Low Credit Score?
Even if your credit score is less than 700, there is no need to panic. You may still be able to get on the road. Experts report that approximately 25% of vehicle financing every year goes to customers who are considered non-prime, based on their credit score. However, it is up to you to work on your low credit score and improve it to prevent problems in future.
Leasing a car with low or bad credit can be tough, but not impossible. You may have a chance to get a car by paying higher interest rates even with a low credit score.
Leasing is a great option that gives you the freedom to drive a car of your choice for as long as you want. A good credit score helps you secure a car lease effortlessly. Visit eAutoLease.com to find the best deals on cars and leasing and enjoy driving the model you have always dreamed of. With the right information and financing options, you can focus on improving your credit score and begin shopping for your next vehicle within no time.
