You need a car but your credit is not in the best shape right now. One idea that has come to mind is leasing instead of buying. Now the question is whether or not your credit will stop you from being able to obtain a lease. The good news is that you will find dealers who are willing to work with you. While the terms and conditions will not be the same as those extended to individuals with excellent credit, this arrangement could still work out for you. Here are a few points you need to keep in mind.
Expect to Pay a Higher Down Payment
The advertising associated with most leasing deals mention lower down payments as part of the lease provisions. Given the state of your credit, the chances that you will qualify for the lowest possible down payment are somewhere between slim and none. Assuming the dealership is willing to work with you, one of the stipulations will be a higher down payment than the one you saw in those ads.
Even though you are not purchasing a vehicle, your credit score does still play a major role in determining if offering a lease is in the best interests of the dealer. Because of the state of your credit right now, you are a greater risk to the dealer. One of the ways to minimize that risk is securing a larger down payment on the front end.
When you visit a dealership and begin the application process, it pays to be up front about the state of your credit. That provides the opportunity to get an estimate of how much of a down payment would be required. While you still have to complete the application and it must go through evaluation, having some idea of how much cash you need to supply if the lease is approved will make the transaction easier.
There May Be a Security Deposit Too
Depending on how poor your credit rating is at present, the dealer may require a security deposit. This is another strategy used to protect the dealer from a potential loss. Look closely at the lease provisions so there is no question about whether you are tendering a refundable deposit or one that is non-refundable. This will help you to know what to expect when the lease term does come to an end.
The Interest Rate Will Be Higher
Many people are surprised to learn that car leases do include interest as part of the arrangements. You’ll find that the rate of interest connected with your lease will be higher than the rate extended to those with higher credit scores. This is another way that the dealer reduces the risk of doing business with you while still finding a way to get you behind the wheel of a dependable vehicle.
Don’t Rule Out the Idea of a Lease Transfer
If you are having trouble finding a dealer willing to offer a high-risk leasing agreement, don’t assume all is lost. Look into the idea of a lease transfer. This arrangement involves taking over the lease of someone who wants to get out of it for some reason.
Your credit rating will still play a role in the approval process and the overall cost may or may not be higher than a standard leasing arrangement. Some lease transfers will not require you to provide another down payment or a security deposit. At the same time, you’ll also find that the odds of being approved are a little higher and the provisions are not quite as strict.
Poor credit does limit your leasing options but does not close all doors. While it may take more effort, there is someone out there who is willing to work with you. Check around and it won’t take long to find an arrangement that you can afford and will ensure you have access to reliable transportation.