When you lease a car, you're essentially taking out a loan with a finance company. You'll then pay back that loan monthly, which pays for your brand new car.
When lending money, finance companies need to be confident that you'll be able to pay them back. They assess this confidence in the form of a credit score; so for a finance company to agree to your lease, you'll need a good score.
This guide will talk about how a bad credit score can affect your eligibility to lease a car.
Can You Lease A Car With Bad Credit?
Although possible, it is unlikely that if you have a poor credit rating you'll be accepted for a lease.
Finance companies have credit report scorecards that will assess whether you should be given credit. These scorecards are based on credit-worthiness, affordability of all the monthly payments and a range of other factors.
At Vanarama, we use a panel of different funders, so if a person's credit score is poor then that will greatly reduce the number of funders that will potentially approve your application (if any).
What Sort Of Deal Will I Get If My Credit Is Bad?
The monthly price shown on your quote will be set and subject to passing a credit check. A funder will not increase the monthly price based on your credit score. So in order to get a deal in the first place you will need to have acceptable credit.
The likelihood of being approved on the best & exclusive deals will be higher for those with a higher credit score. Those with a "poor" score may not be eligible for those offers.
The only thing a finance company may do is ask for a higher initial rental or a shorter lease term than applied for if your credit searches return a "borderline" decision.
What Is A Bad Credit Score?
A poor credit score is a combination of many factors – lease payment history, traceability, and other risk factors.
Despite the misleading name, there is actually no set number or score that works universally. This is because all of the finance companies have their own scorecards which take into account your credit history.
At the end of the day, if you can show finance companies that you can and will pay them back, they are much more likely to accept you for a car leasing agreement.
What Can I Do If I Am Worried About Passing A Credit Check?
There are a few things you can do if you're worried that you won't get credit to lease a car. In the first instance, you could check whether you're likely to get credit. At Vanarama, we've got a helpful tool called the eligibility checker which can help you quickly and easily find out if you are likely to be accepted for one of our car lease deals.
Alongside the Eligibility Checker, there are various services available to check your personal score, such as Experian, Credit Karma, ClearScore etc. These services will give you a strong idea of how your score stacks up against the average UK standard for a good credit score.
If the decision returned from this is positive, then there's a good chance you'll be accepted with one of our funders.
Can Car Leasing Improve Your Credit Score?
As with any agreement that involves monthly payments, leasing a car can impact your credit score. As long as you are able to pay your monthly payments each month your credit score will slowly improve. Missing payments can impact your credit score negatively.
The length of your lease can also impact your credit score, with lengthier leases taking longer for your credit score to improve.
At Vanarama we always ensure that we find out customers the right, affordable that suits their needs and financial situation. Find more about car lease finance options to see what options are available.