Car Lease - Good Credit
Do you need good credit to lease a car?
You will have to have good credit if you want to lease a car — better credit than if you were buying your car with a loan.
Many car companies and banks lost money on car leasing in the last few years due to customers defaulting on their lease agreements. As a result, leasing is now requires better credit. Furthermore, leasing is a bigger risk to a finance company or bank than a conventional loan, especially if there's no down payment.
How good does your credit need to be to lease a car?
There are essentially two kinds of car lease deals — normal and promotional deals.
A promotional car lease deal is one offered by automakers and their dealers for a limited time period (usually a month or two). The deals are heavily advertised and can be viewed on car company web sites. In most cases, these special deals are based on reduced prices, low money factors, and boosted lease-end residual values. One drawback is that the deals typically only apply only to a few models and styles, not every vehicle in a car company's lineup. Furthermore, there may be mileage restrictions and down payment requirements.
In nearly every case, when viewing the small-print details of such promotional car lease deals, you'll find a statement similar to this: "only available to well qualified customers."
What does this kind of statement mean?
It means you must have not only good, but excellent credit to take advantage of the advertised lease deal. Car companies what to make sure that customers who accept the deals have a low risk of defaulting (failing to pay, ending the lease early, returning the car before end of lease). A minimum credit score of about 700 or 720 is needed to qualify for the offer. Some offers even specify the exact credit score required.
Before you visit a dealer to consider a special car lease deal, you should know your credit score beforehand. Don't wait and let a dealer surprise you with your score. You can get your credit score with a quick signup online at FreeCreditScore.com.
What if you have good credit, but not necessarily excellent credit?
You may still be able to get a normal non-promotional car lease deal even with less-than-perfect credit. However, the lower your score below the 700 mark, the less your chances of being approved, and it's almost certain that you won't be able to take advantage of special lease offers.
There are no "sub-prime" financing providers for leases as there are for loans, which makes it easier to get a car loan with bad credit than get a lease with bad credit. If you do not have good credit and need a car, a loan might be your best option. Consider a reputable online lender such as Auto Credit Express and get a free no-obligation quote. This company specializes in car loans for people with poor credit, bankruptcies, and repossessions.
Summary
Do you need good credit to lease a car? The short answer is yes. You need better credit than if you buy a car with a loan. And you need extra good credit if you want to take advantage of special advertised lease deals.
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