Many of us assume that leasing a car with bad Credit isn’t an option. But it is! Depending on where you live, driving is a necessity, and the good news is that you don’t need a perfect credit file to get yourself on the road. There are finance companies who’ll provide you with a leasing contract even with bad credit.

In this blog post, we’ll give you all the information you need on how you can Lease a car even if you have Bad Credit.

Can I Lease a Car with Bad Credit?

Yes, you can lease a car with bad credit. It may not be as straight forward as it is with good credit, but it is possible. To improve your chances of being approved, here are a few things that you can do.

1. First, even if you have bad credit, it would be good to start building up a history of making payments on time. So, start from now with paying back what you owe, even a short period of time will work in your favour.
2. Think about your employment. It will help also if you can prove that you’ve got a steady income coming in, even if it’s not as much as you’d like. This will show the lender that you’re capable of making the monthly payments when they’re due.
3. Maybe you could put down a larger deposit? If you can save up any extra cash or borrow from friends and family for a larger deposit will give lenders a safety net in case, you default on the payments. They’re far more likely to approve your lease.
4. Find a lender that specialises in considering bad credit loans. They’ll look at more than just your credit score when reviewing your bad credit application. They’ll look at different criteria to assess your affordability.

By taking these steps and if you’re willing to put in a little extra effort, it’s possible to lease a car with bad credit.

How Does Car Leasing for Bad Credit Work?

The process is almost no different to if you have good credit. But instead of working with a bank or financial institution, you’ll work with a specialist leasing company. These specialist companies have different requirements as they look beyond your bad credit.

Car leasing companies who are in the market to help people with poor credit histories could:

• Ask that you pay a bigger deposit
• Have higher interest rates on their lease agreements
• Have less options for you to choose from

Taking out a car lease with one of these companies isn’t necessarily a bad idea. It can help you to build your credit score if you make your payments on time which can help with future loans on cars, or otherwise.

What Should I Consider When Leasing a Car with Bad Credit?

If you want to lease a car with bad credit, there are a few things to think about before signing on the dotted line.

1. Can I Afford to Run the Car?

You’ll be responsible for making monthly payments so make sure you can afford the payments before applying. Remember to take into account the running costs, which don’t just mean paying for the fuel. Depending on your contract you’ll have other costs to pay for, such as:

• Car insurance
• Road tax
• Tires and general maintenance
• MOTs

2. Do I Really Need a Car?

If you only need a car for occasional use, leasing may not be the best option. You may want to consider other options like using public transport or car sharing services. If you do need a car, think about whether a smaller, less expensive one will do.

3. Do I Have Enough of a Deposit?

The larger the deposit you can pay, the lower the monthly payments will be. There are some companies who’ll give you a car lease with no deposit – even with bad credit. But you’re better off working out if can put down a deposit before applying for a lease.

4. What is the Best Deal?

There are lots of different leasing companies out there, including some who offer car leases for bad credit. Some of these are brokers rather than direct lenders, so do your research. Compare rates and terms so you can choose the one that suits you best.

5. Am I Prepared to Explain my Poor Credit?

Leasing companies will want to know why you have bad credit. You’ll need to be honest and open when you answer any questions they have. They may ask for extra information such as payslips or bank statements, which you’ll need to provide.

6. How Many Miles Will I be Driving?

Most leases have a mileage limit, so it’s important to estimate how many miles you’ll be driving in a year. The more miles you do, the higher the monthly payments.

By making sure you know what you’re taking on you’ll be able to choose the best leasing agreement for you. And you’ll be able to find which company are more likely to lend to you. Even with bad credit. 

What are the Advantages and Disadvantages of Leasing a Car with Bad Credit in the UK? 

Leasing a car with bad credit in the UK has its advantages and disadvantages. The table below lists some of them.

What Can I do if I am Rejected for a Car Lease Because of Bad Credit?

If you’ve ever tried to lease a car with bad credit, you know the process can be frustrating. You may be told that your credit score is too low, or that you don’t have enough income to qualify. But there are a few things you can do if you find yourself in this situation.

1. Leasing companies use your credit score to determine how likely you are to make your payments. If your score is low, find out if there’s anything else you can do to get the lease. You could:
   • Show the company your payslips and bank statements to prove you can afford the payments.
   • You could offer to pay slightly increased rental payments if you can afford it. Then take on a shorter lease so they’re not high for long. By showing you can keep up your payments it’ll help bring them down on your next lease.
   • Offer to make a higher deposit if you’ve got the money to do it.
2. If you’re denied a lease because of your credit score, consider taking out a joint lease. If you do this, then both incomes and credit scores will be taken into account. Of course, both of you will be responsible for the payments too. And if you default on the lease agreement, then it’ll affect both your credit files. You can only do this with someone who shares your address.
3. If your application has been declined, you could appeal against the decision. Get a copy of your credit report and check if there’s anything on there that could be changed. By presenting more up to date facts on your situation, it might help them change their mind.
4. Ultimately, the best way to improve your chances of getting approved for a car lease is to build up your credit score. This does take time, but by improving your credit score it’ll make it easier to lease a car in the future.

What are the Alternatives to Leasing a Car?

If you’ve been turned down for a car lease because of your bad credit score, then don’t worry, you’ve still got options.

1. One option is to lease a car through a ‘subprime lender’. These lenders specialise in working with those of us with bad credit.

You may find one or two who are willing to lease you a car with no credit check. But you should keep in mind that all lenders who are regulated by the Financial Conduct Authority (FCA) will carry out a credit check. The FCA ensures best practices are being followed and financial institutions are treating consumers fairly. Borrowing from a lender who is not regulated by the FCA is risky.

Here are three companies who claim to offer cars on lease specifically for people with bad credit.

• Any Car Online this is a direct lender.

These next two are brokers, so they search a panel of lenders for you.

• Hippo Leasing
• Car Finance 247

2. Another option is to take out a car loan. Even if you have bad credit, you may still be able to get approved for this type of loan. The terms of the loan are likely to be less favorable than with a lease agreement. But it’s another option if you are in real need of road transportation.
3. You could try getting a personal contract purchase (PCP). This is a type of financing is where you make monthly payments for an agreed period of time. At the end of the agreement, you’ve got the option to purchase the car outright by making a final lump sum payment. Otherwise, you can just return the car to the lender.

Whatever option you choose, make sure that you do your research first. You don’t want to keep making lots of credit applications as this will hurt your credit score.

FAQs – Bad Credit Car Leasing

Disclaimer: Any information provided does not constitute financial advice. Please read carefully about the terms and conditions of the credit provider you choose to take out a loan from. Any links to external websites are for reference only and are correct at time of publishing.