Archive for the ‘Lease with No Credit’ Category

Can you Lease a New Car with No Credit?

Wednesday, May 16th, 2012

Leasing a car with no past credit history can be difficult. Car dealers typically want to lease vehicles to individuals who are most likely to make their lease payments on time every month and who are least likely to default on their monthly payments. When you have no credit established, it isn’t as easy to prove to the dealer that you will not default on your car lease because you have no established credit to show the history of your debts and payments on various credit accounts. Although leasing a car with no credit can be difficult, it isn’t entirely impossible. In fact, there are several methods through which you can successfully lease a car despite the fact that you have not established any credit.

One way to successfully lease a car with no credit is to show proof of your income to the dealer. Many times, even when you have an excellent credit score and an excellent credit history, dealers will ask to see bank statements or paycheck stubs in order to prove that you have the financial capability to make the monthly lease payments. Your goal as someone with no established credit is to prove to the dealer that you have a stable job and/or a stable income in order to make the monthly lease payments.

You should also consider asking a close friend or family member to act as your cosigner. It is important to remember that your cosigner will be equally responsible as you will be for making the car payments every month until the end of the lease. Therefore, if you lose your job and are no longer able to make your lease payments, his credit score will suffer just as yours will. You should pick a cosigner who has not only established a long credit history, but who also has a relatively high credit score.

Because you want to lease a car with no credit, expect to pay more. The dealer will most likely require you to make a higher down payment along with a higher monthly payment in order to offset the risk that is associated with someone who does not have any established credit.

5 Reasons Why You Probably Should NOT Lease a Car!

Thursday, July 28th, 2011

While leasing a car can be a great way to drive a brand new car for several years, it may not necessarily be the best option for everyone. What follows are 5 reasons why you should avoid leasing a vehicle.

1. You should NOT lease a car if you have bad credit. If your credit score does not equate to a “good” or “excellent” rating, your credit score is not as high as it should be. Unless you cannot wait several months in order to improve your credit score, it would be in your best interest to avoid leasing a car. If you do lease a car with bad credit, you will end up with a monthly payment that is higher than what can be considered a fairly good deal. Many of the special advertised lease deals offered by dealers or auto makers are often only available to those customers who have a tier 1 credit rating. A tier 1 credit score is one that typically exceeds 720.

2. You should NOT lease a car if your career or lifestyle involves frequent trips or traveling. Some people tend to take frequent trips outside of their city or state of residence for reasons that often have to do with their career or business. If this applies to you, you should probably avoid leasing a car because you probably won’t be driving the car enough in order for the monthly payment to be worthwhile.

3. You should NOT lease a car if you plan on modifying it. Many people, younger drivers in particular, like to accessorize or modify their vehicles by tinting windows, adding spoilers, replacing exhaust pipes etc. While modifications to your car may provide the car with improved performance or a more attractive appearance, keep in mind that any car that you lease is not actually yours. If you plan on returning a leased vehicle to the dealership at the maturity date of your lease (the end of your lease term), you must return it in its original form.

4. You should NOT lease a car if you drive too much. With long commutes to work or school becoming more and more common, people are driving more than ever just to get to work or school. When you lease a car, you are allotted a yearly mileage limit. This limit is typically 12,000 miles per year or 15,000 miles per year. Of course, you can exceed this limit but you will be charged a certain dollar amount for every excess mile. The amount you are charged varies from one car to another. For example, the excess mileage charge on my 2010 Honda Accord is 15 cents per excess mile. This may seem like a negligible amount, but a few thousand excess miles per year will add up to hundreds or even thousands of dollars by the end of my lease.

5. You should NOT lease a car if you plan on driving it for more than 3 years. With the length of most car lease terms hovering around 3 years, you won’t be attached to the car for a very long time. Of course, you could choose to buy the car after the term of your lease has ended, but this is a less popular choice for lessees.

How to Lease a Car With Bad Credit

Tuesday, June 8th, 2010

Having bad credit means you are viewed as a high risk by the finance company who decides whether you qualify for a lease deal. If you have bad or poor credit, you are obviously in a less than ideal situation. However, keep in mind that not everyone has great credit and just because your credit score is sub-par does not mean there is no hope for you.

Generally, if your credit score is not 720 or higher, you will not qualify for the special lease deals that are typically available to tier 1 customers who have a higher credit rating. This means that you will most likely be required to make a much larger down payment or in leasing terms, a cap cost reduction, and you can also expect a higher interest rate or money factor.

If you would like to lease a car with bad credit, there are three different actions that you can take in order to improve the likelihood of getting a fairly good deal:

  1. Generally speaking, your most recent credit history has the greatest impact on your credit score. If your credit score isn’t too low, it would probably be a smart decision to put off leasing a car for several months until your credit score improves. During these few months, make sure all mortgage payments, credit card bills etc. are paid on time. You should also make an effort to reduce your debt as much as possible.
  2. Another great option would be to have a co-signer when you lease your next car. The co-signer is generally a blood relative who becomes equally responsible for making sure all lease payments are made on time. Your co-signer should have a higher credit score in order to offset your lower credit score. Having a co-signer is also an excellent way to improve your credit score over the life of the lease.
  3. Most car manufacturers have their own finance companies. For instance, American Honda Finance Corporation is Honda’s finance company. If your credit score isn’t too great, these finance companies may not approve you for a lease. Your best bet would be to research finance companies that are willing to work with customers who have bad credit. Car dealerships can help you find alternative finance companies.