Overview
The ability to leave home and drive to another location is an important part of American life, but people with bad credit may have a difficult time leasing a vehicle. Companies that specialize in financing seem to want to lend only to people who do not need credit, but this is actually not true. These companies constantly assess the likelihood that people will be able to make all payments on the money borrowed, and their prime concern is making a profit from the loan. There are effective measures people with bad credit can take to help them secure a lease deal, but some are easier than others.
Personal Credit Information
Credit is an important component of financial health, but few people take the time to really look at their own credit report. These credit reports can be obtained online, and each American is entitled to a free copy of their credit report once a year. Those with bad credit will often have payment gaps in previous loans, a high credit to income ratio or unsatisfied debt. All of these factors are considered by lenders, and they will directly affect the amount of credit and its cost to the consumer. While it is not guaranteed to help, a person armed with their own credit information may be able to negotiate a better lease deal if they can explain their payment history or other credit issues.
Credit Correction Measures
There are few people who think about their credit report when they are not seeking a loan or lease, but this is a good time to look at it. Over the years, many people have found errors or identity theft have lowered their credit rating. Taking the time to review and correct credit information is a good way to raise credit ratings, and it will help when looking for an affordable lease. It may take years before good credit is restored, but a consumer who can a raise their credit rating even a few points may have an easier time.
Know the Options Available
The majority of vehicle leases are obtained through dealerships, and it is best to know ahead of time what offers are currently being advertised. Checking out the availability of vehicles with several different dealerships provides the opportunity to explore options, and it can be done online without giving out personal financial information. Internet searches have become one of the best ways to obtain information, and they can be done before leaving home.
Choose an Affordable Vehicle
Many advertisements for vehicle leases tend to emphasize the low security deposit and lower payments of more expensive vehicles, but bad credit will often cost a consumer more when leasing. A larger down-payment and higher monthly payments are all part of the package, so choosing a lower cost vehicle is generally the best option for an affordable lease.
The Co-Signer Option
People with credit issues may have a friend or relative with excellent credit who is willing to help them, and these are the types of people to approach about co-signing a lease deal. A person who co-signs a lease contract is putting their credit and income on the line, and they will be held responsible if the payments are not made. This is a difficult option for many people, but it is one way to obtain a vehicle lease.
End of the Year Deals
Vehicle manufacturers redesign their products on a yearly basis, and many dealerships are desperate to sell or lease their current stock before the new models come out. Dealership sales staffs are often encouraged to reduce inventory quickly, and this might be the best time for a consumer with bad credit to obtain a good lease agreement. Choosing last year’s model may not be ideal, but the vehicle will still be new as well as covered by the manufacturer’s warranty.
Lease Assumptions
People with bad credit are often turned down for leases because it is simply a different form of vehicle loan, but that does not mean they cannot lease a vehicle. Dealerships drum up business by offering special contract terminations for those who want to lease a new vehicle, and the previous leases are offered to those who do not qualify for new vehicles. Paying attention to dealership advertising is an excellent way to find out if they have lease assumptions available, and many overstocked dealerships are willing to work with those who have credit issues.
Used Vehicle Options
While new vehicles are generally advertised for lease, used vehicles may also be an option. A vehicle that has already been leased or purchased has less value, and it may be the best way to obtain an affordable lease when credit issues arise. Consumers with lower income may be able to better afford the payments, and they might also see a much lower security deposit.
Negotiation is Key
When dealerships advertise lease options on new vehicles, the price of the lease and down payment are clearly stated. This leads many consumers to believe the prices cannot be negotiated, but that is untrue. When a dealership offers new leases, they are often overstocked. Selling or leasing the vehicles they have on the lot is a priority, and even a consumer with bad credit may be able to negotiate a good deal. It never hurts to ask, and the only downside is that the negotiation may not result in obtaining a vehicle.
Consumers with bad credit have long been at the mercy of lenders, but there are still options available when a vehicle is necessary. The consumer may not be able to get the car of their dreams, but they do have a good chance of finding reliable transportation within their current means.