Having a poor credit score or simply having no credit can often make it more challenging to lease a car. If you have bad credit, you could be seen as more of a ‘risk’ for lenders, so many lenders increase the interest rate they apply to your repayments.
Having bad credit can also mean your repayments are likely be higher, so it’s important to make sure you can afford them. But despite all these challenges, the good news is it is still possible to lease a car. Here are some simple steps to help you through the process:
Review Your Credit Report
Carefully examine your credit report and dispute any mistakes. You can review your credit score from each of the 3 largest UK credit reference agencies:
- Experian
- TransUnion
- Equifax
If you notice any mistakes on your report, inform the credit reference agency to get them corrected.
Take Action
Focus on paying your bills on time if you have not been doing so. If your recent credit history shows you have been paying your bills in full and on time this may have helped increase your credit score, and your chances of leasing a car with bad credit.
Missing or late payments can have the reverse effect, decreasing your credit rating and making future financial undertakings more challenging.
Factors To Consider Before Leasing With Bad Credit
Before deciding to lease a car while you have bad credit, consider the necessity of having a car against the associated costs, which include fuel, insurance, and maintenance.
Calculate An Affordable Budget
Alongside your credit score, car leasing companies will also look at your ability to repay the loan. They review your monthly expenditure and total income in comparison to the amount you wish to borrow.
To avoid any unwanted surprises, calculate your monthly budget by writing down your monthly expenses (such as standing orders for things such as rent/mortgage, TV subscriptions, etc) as well as your monthly income. Choose a car that you can comfortably afford, ensuring that the new car leasing repayments fit within your monthly budget.
Shop Around
The last step is to find the best lender for you. Different leasing companies have varying rates, requirements and policies.
Leasing companies often offer money saving incentives. Companies such as Compass Vehicle Services Ltd (CVS) specialise in leasing cars to people with poor or no credit, as cost effectively as possible and include road tax and a 12,000 annual mile allowance as standard in their lease deals. It also worth viewing the lenders reviews on platforms such as Trustpilot.
Conclusion
Leasing a car with a less than perfect credit score can be challenging, but it’s certainly not impossible. By carefully understanding your financial situation and approaching credit and repayments responsibly, you can navigate the leasing process and potentially improve your credit score for future opportunities.
When choosing a car leasing company, it’s important for you to do your research and choose a company best suited to your personal requirements. Considering the steps in this article can help you can ensure a positive and stress-free leasing experience.
