Having bad credit or no credit at all can present a major obstacle to leasing a vehicle. But there are other options for you to get behind the wheel of a new car — even with less than perfect credit history. You can get back on the road by agreeing to a larger down payment, getting a co-signer or taking over another lease.
The effect of credit on leasing
While no credit score, or a low score, does not necessarily keep you from leasing, it could require a larger down payment or higher monthly payments overall. The higher monthly payment is mainly due to the higher interest rates that lessees with a lower credit score qualify for.
According to Experian 2021 Q3 findings, the average credit score of drivers leasing a vehicle was 732, a one-point decrease from 2020 Q3. This score falls under the prime category — ranging from 661 to 780.
3 options for getting a lease with no credit
If you are just starting out and don’t have a credit history, there are some options to help you get a lease on a car. In addition, once you do get a lease, the payments help you establish credit. The next time you lease, you may get a better interest rate and lower payments.
1. A bigger down payment
By making a bigger down payment on a leased car, you are making an investment in the vehicle. In addition to reducing the overall cost of the lease over its term, the willingness to pay extra on a down payment eases some of the potential risk for the leasing company and could make it easier to qualify for the car lease.
2. Get a co-signer
Another option for getting a lease with no credit includes getting a co-signer. A qualified co-signer, who must have good to excellent credit, takes on the responsibility of paying the lease if you can’t. The addition of a co-signer gives assurance to the lender that the loan will be paid regardless of your payment history — or lack thereof. Keep in mind that skipping payments can cause trouble for your co-signer along with yourself.
3. Take over another lease
Taking over an existing lease is one final way to get a lease with no credit. Instead of going through the leasing company directly, you approach a leaseholder about taking over their lease. While the car company still does a credit check, lenders are more willing to work with you since taking over a lease usually occurs when the other person is in danger of default.
The bottom line
While you may need to pay a larger down payment and can expect a higher monthly cost, leasing can still be in your future even with bad or no credit history. It is a viable way to drive a new car. It’s cheaper than buying, and it can help you build credit, assuming you make your payments on time.