How to Lease a Car with Poor Credit
You can still lease a car even with poor credit. It is not all that different than leasing a car with good or average credit. You may need to lease a slightly used vehicle or a less valuable model.
A lease is an agreement usually bond by contract in which the borrower (lessee) agrees to pay for borrowing a particular property, asset, automobile which is owned by the lessor for a period of time in return for rental payments.
How does a car lease work if I have bad credit?
Car leasing also known as auto leasing is a type of lease (rent) of a vehicle for a specified period of time for an estimated rent fee. It is usually used as a substitute for car purchase obtained from dealers used by various institutions, firms and organizations for businesses to cover for the huge capital required in buying them. A lease is usually for a period of one to five years after which the leased cars are usually returned or sold at the value after use. View the best leasing options available right now.
Your credit score may play a small role. Be sure to contact the leasing company or dealership prior to applying and ask for their requirements. This may save you a lot of driving around and filling out applications just to be denied.
Understanding a car lease and a car loan
There exist similarities between car lease and car loan. However, car loan is quite different from car lease in the sense that while you are only paying for the privilege to drive a car in car lease, you will pay to fully own and acquire the car in the case of car loan.
A car loan is usually acquired through bank financing, vehicle dealership and other financial institutions unlike car lease which is usually only acquired through dealership. Monthly or quarterly payments for leases are often much lower than payments for loans.
Reasons why leasing a car may be advantageous
Though leasing may be cheaper than loan based on monthly payments. However, leasing is more expensive than loan in the long-run.
These are some few reasons to consider before leasing a car
You don't want to own a car
You need a car for a short period of time
You want to buy new cars
You are on a budget
- Your poor credit will not allow you to purchase a car
Before leasing a car, a lessee is expected to consider the reasons for leasing a car which has to do with budget and lifestyle, need of a vehicle for a short and specified period of time.
For example, a Nigerian student who is on a one year scholarship to Canada will prefer to lease a car for a year rather than to buy one because he will get it at a cheaper rate and will not have to sell the car at the end of his scholarship period.
Why people choose to lease a car instead of buy
The importance of a car lease is not far-fetched. It is of great importance to both the lessee and the lessor. The lessee doesn’t necessarily have the responsibility of repairing the car or selling it after the agreed period of time. Some customers prefer leasing to loan because it offers them the opportunity to change the type and model of vehicle after the expiry of their lease contract permitting them to drive a new car. These are part of the advantages of car lease to a borrower (lessee).
For the lessor, leasing creates revenue from the vehicle the owner leased out, still owns and will be able to lease again or sell. Cars are usually leased to customers for a shorter period than a loan so lessors generate more money by frequently leasing cars out to customers.
What happens at the end of a lease?
At the end of a lease period, the lessee can either;
Buy the car
Make payments and opt out of the contract
If you have poor credit, before leasing a car, a lessee is expected to consider the reasons for leasing a car which has to do with budget and lifestyle, need of a vehicle for a short and specified period of time. This will help the lessee in making a decision on whether to lease, loan or buy a car.
Real Life Expert - Author:
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Services on our website are free to use. You will not be charged to submit an application. Installment loans and payday loans should be use only as a temporary solution.
Must be 18 years old to apply and be a full time citizen of the United States.
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Consumer Financial Protection Bureau
PO Box 2900
Clinton, IA 52733-2900
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