When you are considering leasing a car, your credit history and credit score are critical determinants on whether or not you get approved and the kind of deal you get.
Scores of 720 and over translate to the best terms. As the scores get lower, the terms of the lease get less and less favorable. On the other hand, some car lenders are willing to lease cars even if your credit score is below the minimum requirement of 620. The question, however, is if the lease rate is worth the deal.
So, what credit score do you need to lease a car? Here’s what you need to know:
Credit Score Ranges
Before any auto finance dealer approves a lease, they consider your credit score. Notably, the exact score needed varies among different dealers. That said, they all work within similar ranges. These ranges dictate the terms of your car lease.
Credit Scores of 720 and Over
This is the super ideal range of your credit score. It is an indicator of your trustworthiness as a borrower which gives you more negotiation power over the terms of the lease. For instance, if you do not have enough down payment, you can renegotiate for a low amount and higher monthly installments.
Additionally, you have a wide variety of cars to choose from, low interest, and you will spend less time shopping since every dealer wants to work with you. It’s like a ‘sure bet’ that you will get a lease approval.
Credit Scores from 660- 720
In this category, you might not get the best deal but you are still considered a prime lessee. The probability of having your lease approved is high since you are not seen as a risk. You may also get the same advantages as people with higher scores. However, you may pay a higher interest rate.
Credit Scores Between 620 – 659
Being in this category means that you are in the minimum range for most dealerships. You will have challenges getting a dealer who will consider you for a lease.
Typically, you are considered a bit risky and if you do get a willing dealer, the odds are high that they might not favor your demands. Besides higher interest rates you are likely to part with a huge down payment and higher monthly payments.
Credit Scores Below 620
Given that the typical minimum credit score for a car lease is around 620, the chances of getting a car lease approval in this range are slim. Most lenders consider you a risk since there is no assurance of timely payment. While it is not entirely impossible to get a car lease, you will spend a lot of time shopping around.
This is not only frustrating but it also means that you can only get a limited number and model of cars to choose from. What’s more, the few dealers that might work with such low scores tend to demand very high rates and also ask for a security deposit.
For assistance in repairing your credit and getting a higher score, contact Credit Absolute for a free consultation.
How to Lease a car with a Low Credit Score and Grow your Score
Being on the lower end does not mean that you cannot enjoy a car lease. There are ways to ease the process and also repair your score in the long run. Here are some pointers:
- Consider a car that is used for approval purposes. It’s less challenging to get a lease on a used car compared to a new car.
- Ask someone who has good credit to co-sign for you. This way, you will get the car that you want and grow both your credit scores during the lease period.
- Ensure that you make timely monthly payments on your other debts. Note: Payment history accounts for 35% of your credit score.
- Time your application to the end of the year when dealerships are getting ready for new year model releases. While the trick doesn’t always work, you might find a dealership willing to negotiate with you if they have a car that has overstayed in their lot.
- Make sure you limit your applications to leasing companies where you have a higher chance of approval- browse for requirements of several dealers beforehand.
The Bottom Line
There’s no doubt that your credit score plays a major role in the terms of leasing a car. Now that you are aware of what to expect with your credit score, you can go ahead and strike a deal or if you feel limited, wait a little longer to notch up your negotiating power.