So, you're interested in leasing a car, but you're afraid your credit score isn't good enough. What credit score do you need to lease a car?
While this figure varies by a dealership, the average credit rating to lease a car is around 620. As long as you have a score of at least 620 to 680, you shouldn't have any trouble getting approved.
What happens when your credit score is below 620? Is it still possible to get a lease on a car? Moreover, is it easier to get a lease if you have low credit? We have the answers to these questions and more, so keep reading to find out the truth about car leases.
What Is a Car L-ease?
If you've ever shopped for a car lease, you know that your credit score is a major factor in what you can get. Car leases are not loans, so they rely on your monthly income to determine the price. If your salary doesn't match up to what the lender expects, or if you have a low credit score, it might be difficult to find a lease with an affordable payment.
Getting a car lease is a great way to get a vehicle without the full financial commitment. If you have good credit, you'll have no problem getting a lease. But how do you know what your credit score needs to be in order to get the best deal possible?
The first step is knowing your credit score. You can get this by contacting one of the three major credit bureaus: Experian, Transunion, and Equifax. With this information, you can determine if you're qualified for a lease and at what interest rate.
The next step is determining how much of a down payment you should make when applying for a lease agreement. This varies by state and lender, but it's usually around 20% to 25%. A down payment in this range is recommended to ensure that you don't get underwater on your agreement.
When leasing a car, you will need to make sure you have the funds to pay the car lease in full at the end of your agreement. You can rarely take out a lease buyout or ask someone else to co-sign for you. Leases are solely your responsibility, and if you don't pay them in full, your credit score will be negatively affected.
Leasing is a great way for people with fair to good credit scores to get an affordable vehicle. The best choice for people with good credit is purchasing a car outright, which is cheaper than paying monthly payments through a lease agreement. For those with lower credit, it's best to consult with a financial advisor before making decisions about leasing or buying cars.
Can I Lease a Car with 600 Credit Score?
Leasing a car with a 600 credit score is possible. People with low or bad credit may find it difficult to get approved for loans which means their only option may be leasing. Low-end lease deals are typically offered to those with credit scores below 640, making them an affordable option if you can't afford to buy a car outright.
Typically, lenders want to see a credit score of at least 620 when leasing a car. If you have a credit score of 600, it can make it difficult to get a car lease. Difficult, but not impossible. You just need to know what you can do to improve your credit. As you work on improving your credit, it will become easier to get approved.
In the meantime, however, there are several things you can do right now to increase your chances of getting a lease. If you don't get approved the first time around, follow the tips below to help improve your chances the next time.
Also Read: An 800 Credit Score: Is It Good or Bad?
Do Your Research
The first thing you want to do is research the different dealerships and vehicles available. The more you know about your options, the better. You can also talk to someone at a dealership or other car loan company to get a feel for how they operate and what they offer.
Find the Right Dealership
Some car dealerships are more lenient with their bad credit customers than others. Doing research on the dealership before you go in will help you find the right one for your needs. The first step is to figure out what type of car you want and research those models.
Once you have a list of a few cars, visit a few different dealership websites to get an idea of who has good deals. After reviewing the prices and offers from each dealership, check to see if they have any promotions or specials going on at the moment.
When you've found a few dealerships that seem like they'll approve your lease, start calling them to see which one will give you the best offer. Keep in mind that some dealerships may require you to put down a deposit or have a co-signer until your credit improves.
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Be Prepared with a Down Payment
Leasing a car can be expensive, especially if you don't have a higher credit rating. If your credit score is 600, you may need to have a down payment. Exactly how much of a down payment will depend on the credit score that you have.
If you have a higher credit score, then you likely won't need to provide a down payment. If you have a lower credit score, then you'll be required to put down more money upfront to show the dealership that they won't lose any money by approving you.
Arrange for Financing Ahead of Time
The first thing you should do is arrange for financing ahead of time. This way, the dealership will know that you are serious about getting approved for a lease and will be more inclined to approve you.
If you have a bad credit score, then the dealer is going to want to see that you have made arrangements for financing. If they see that you are only applying for the lease to get your car without considering your finances, then they are less likely to approve you because it will not be profitable.
Get Your Credit Checked Early on in the Process
You should get your credit checked early on in the process of shopping for a car. Just because you have bad credit doesn't mean that you can't find a dealership that will approve you for a lease.
You'll want to bring a copy of your report to show them what your score is and discuss how it will affect the APR and payments. It may be worth going to a larger lot with more cars available because they will have more chances of finding one that they think they can make money off of.
Is a Lease Easier to Get Approved?
To get a car lease, you typically need a good credit score. A good credit score is a score of 700 or higher. With that said, you can get a lease with a fair credit score. But if you have a lower credit score, your monthly payments and interest rates will be higher, which can result in paying more over the course of the loan.
This is why it's important to know your credit score before applying for a loan or lease agreement. If you're looking to finance your vehicle purchase outright, there are many other options like buying from dealerships and purchasing through banks and lending institutions. Check with your bank or lending institution to see what they offer in terms of financing options for car purchases.
What Credit Score Is Needed to Lease a Car without a Co-Signer?
In most cases, you should be able to get a lease without needing a co-signer as long as your credit score is at least 620. Just keep in mind that you're likely to pay more in interest and be required to provide a down payment. If you wish to avoid these extra charges, a co-signer may be your best option until you can get your credit score in good standing.
It will take a lot of hard work and dedication. But if you remain diligent, you will see improvements in your credit score over time. This means taking steps toward eliminating unnecessary spending, paying your bills on time, paying off any debt as soon as possible, and reviewing your credit report for any errors.
To get approved for a car lease, you should have a credit score of at least 620. It's still possible to get a lease approval with a lower credit rating, but you should expect to provide a down payment as a requirement. The best course of action is to work on your credit to improve it before seeking a car lease.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.