How to Lease a Car with Bad Credit

WRITTEN BY: Julia Matseikovich


Lower credit scores indicate you’re a risky borrower, even when leasing a new car. Depending on the dealership, your credit report aids in determining your lease terms. But a credit check isn’t the only thing your lender looks at.

Lease payments for a new car with a low credit score can vary. This article covers what you need to know about leasing a car when you have bad credit. You can also see steps to take to improve your bad credit score.

What To Expect If You Lease A Car With Bad Credit

Work to improve your credit score to help lower monthly payments and car insurance premiums. But, in the meantime, these are things to be aware of when you lease a car with poor credit.

Larger car payments

The dealership may require a significant down payment for you to lease a car. Your bad credit usually yields a higher interest rate, making your monthly payments more expensive. Depending on your budget, buying a used car is more affordable.

When you finance, your lease agreement shows your annual percentage rate (also known as the lease factor or money factor). Low credit scores usually mean higher finance charges.

Fewer vehicle options

You must evaluate your financial situation. Since you can expect higher monthly payments, your vehicle leasing choices may be limited. The new vehicle you were hoping for may be far out of reach.

Difficult to trade in

If you can lease a car with poor credit, you walk away with little to no equity on the vehicle. If you want to trade in your car down the road, the value won’t help cover your personal finance. You won’t have anything to apply for a new auto loan or lease.

Alternatives to Leasing a Car

Dealerships and car insurance companies look at your credit history to indicate risk. Lousy credit might prevent you from qualifying for a lease. But there are other options for you to consider.


Car-sharing services allow you to rent a car for a temporary period. You can get a car for a few hours and return it as part of a car-sharing deal. Ensure you read the terms of your agreement so you’re clear on your responsibility.

Lease transfer

Car lease swaps or lease transfers let you transfer your lease to another person. If you have a family member with a lease who can transfer it to your family member with a lease who can transfer it to you, this might be an option.

You can also ask about services to connect leaseholders looking to get out of their lease deals. Then, you can take over an existing lease.

Special finance departments

Certain dealerships have finance departments for those with poor credit. Talk to someone and work out a lease deal for a car loan you can afford.

How to Improve Your Credit Score

Taking steps to fix your credit score makes it easier to lease a car. You should monitor your score through Experian as you work to improve it. Then, you’ll feel more confident when leasing a new car.

Pay on time

No matter what the bill is, always pay it on time. If you miss a payment or a late payment, it negatively impacts your credit. Consider setting up automatic deductions or reminders for yourself so you don’t forget.

Credit card usage

If you have a credit card, work to keep your balance low or at zero. Paying a balance in full every billing cycle helps build up your score. You should also evaluate your finances and stay within your credit limits. Your use of credit shouldn’t go over 30% of your means.

Credit builder loans

There are low-interest personal loans to help improve your credit scores. You can withdraw a lump payment to cover outstanding balances and pay lower monthly installments with interest. Pay it back before applying for your lease, and you’ll see your scores improve.


Is it difficult to lease a car with bad credit?

It can be difficult to get approved for a lease with poor credit. You may need to pay a large down payment, incur higher monthly fees, and have a high-interest rate.

What is the minimum credit score for a car lease?

The minimum score standard to lease a car is 620. Scores falling between 620 to 679 are near prime, with 680-739 as prime.

What credit score is needed to lease a car without a cosigner?

Most dealerships or lenders want a 660 credit score or higher to lease without a cosigner. They consider other factors, though, so your score can vary.

Can I lease a car with a 480 credit score?

Depending on the dealer, there may be options for a subprime credit score of 480. Specific lenders may disapprove, so you must explore options like a lease transfer.

Can I lease a car with a 500 credit score?

Depending on the dealer, there may be options for a subprime credit score of 500. You may need to pay a significant down payment or deposit.

Can I lease a car with 550 credit score?

Depending on the lender, there may be options for a subprime credit score of 550. Look into dealerships with a specialized finance department.

What is the difference between a car lease and a car loan?

Loan payments are typically higher than lease payments. With a loan, you’re purchasing the vehicle. You return the car after the allotted time on your agreement with a lease.

What is the average credit score for leasing a car?

Experian says the average credit score for new car leases is 729.

Why would someone want to lease a car with bad credit?

You may still need a vehicle if you’re working to improve your credit or have fallen on hard times. Car leasing usually has lower monthly and down payments and few repair costs. It can be ideal if you have poor credit.

Bottom Line

If you have a low credit score, it can be challenging to lease a car. If you’re approved, you likely have high interest and monthly payments. It’s also hard to trade in and get any monetary value back from the vehicle.

If you can wait, you should try to rebuild your credit before you lease. Consider buying a used vehicle for lower auto insurance rates. Work to lower your debt, pay your bills on time and cut expenses where you can to save.