In this article, we’re looking at how to lease a car with bad credit rating, including what options you have if you have a low credit score.
Can You Lease a Car With Bad Credit in Canada?
In Canada, the average credit score is around 600, so your score in the “poor credit” range of 560-659, you are not alone. In practical terms, this does mean that everything from getting another credit card to renting an apartment or being approved for a mortgage is immeasurably more difficult.
What Kind of Credit Score do You Need to Lease a Car?
A credit score of around 700 is ideal for car leasing. That said, there is no minimum requirement for leasing a car. A car dealer will consider your credit score, but the number they see won’t make or break your application.
Any credit rating below 680 is referred to as “subprime,” which means many dealers won’t offer you the best deals. Still, if your credit score is lower than 600, you might be able to get a lease still. You can also use that lease agreement to help build credit too, but don’t miss payments.
Is Leasing Better Than Financing With Bad Credit?
For a lower monthly payment, then leasing a car almost always cheaper than getting a car loan, the reason is simple. With a car loan, you are paying the full value of the car (plus interest) over the length of the contract. But when you lease, you are only repaying for a portion of the car’s value over that same period.
Leasing a car is a great way to build your credit back up, just make sure you are making the payments on time.
Another benefit of leasing is that leases usually come with an extensive warranty, meaning if something goes wrong with the car, there’s no money coming out of your pocket to get your car back on the road.
Websites like Canada Drives can help you find leasing options if you’re struggling with bad credit.
On the other hand, if you’re leasing a car, you ou won’t own the vehicle at the end of your lease, meaning starting over with a new contract at the end of the term. As well, you’ll have no equity to use toward the purchase of a new vehicle.
Can You Lease a Car While in a Consumer Proposal Agreement?
If you are in Consumer Proposal (meaning you’re trying to resolve severe financial problems), you might still be able to lease a car. Still, the number one piece of advice is to choose a realistic and affordable vehicle even if you have the income to afford a more expensive one.
Five Tips for How to Lease a Car With Bad Credit
If you’ve decided on leasing, here are some tips to boost your chances of getting approved
Find a Cosigner
One of the most straightforward options, if you have bad credit, is to find a cosigner (usually a friend or family member) with good or excellent credit. The dealer needs to be assured that your cosigner will be able to take over payments if you begin missing payments.
Save for a Larger Down Payment
While a more affordable down payment is one of the benefits of a lease, if you have bad credit and are having difficulty getting approved for a lease, you could offer to make a larger down payment. A larger downpayment lowers the risk to the dealer and hey might be more willing to approve. You could also offer to prepay a few payments; some dealers may be more willing to accept you.
Keep Track of Your Credit
You should also be keeping track of your credit report and score. If you don’t know already, learn how to read your credit report. When you apply for a lease, most dealerships will perform a credit check.
Look for Other Ways to Rebuild Your Credit
If you can put off your need for a vehicle, it’s always better to try and improve your credit score first. Better credit will allow you to avoid things like higher interest rates and the need to put more money down on a vehicle you will never actually own. Taking out some small loans or regularly making payments on your credit card are two ways to build credit.
Take Over a Car Lease With Bad Credit
An excellent alternative for individuals with bad credit looking for a car lease is taking over someone else’s lease. For various reasons, some people may need to break their lease early. These individuals have the option of transferring their lease to interested parties, such as yourself. If a lease takeover interests you, start your research with Canada Drives today!
If you’ve already been rejected for a lease, you may want to consider a lease takeover. This is when you take over someone’s lease who no longer wants it or who can no longer afford to make the payments. Lease takeovers are often easier to get approved for so they are an excellent option for those with bad credit.
It is possible to get a lease for a car even with a bad credit rating, you just have to know what your options and re-building your credit will give you better options. After reading this, you should have some ideas about what’s involved in leasing a car even with bad credit.