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Bad Credit Car Leasing

Everything you need to know about leasing with a bad credit score 

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Written by  Tim Heming
5 min read
Updated: 28 Jun 2022

Leasing could be an option if you can’t afford or don’t want to buy a car outright. But is it still possible if you have a poor credit score?

There are several reasons why you might choose to lease a car in the UK, including not being able to afford to buy a brand new set of wheels. 

Leasing means that rather than owning the vehicle you pay a regular monthly amount to drive a car provided by the leasing company. It’s a long-term rental that usually lasts between two and four years.  

While being approved for a lease car isn’t often a concern for people with good credit scores, if you have a bad credit rating lease providers are unlikely to approve a deal in case you can’t keep up with the repayments.

Can I get a car leasing deal with poor credit? 

Leasing providers will require you to have a good to excellent credit rating in order to be approved for the finance. So, if you have bad credit, you will more than likely find it difficult to be approved for a car lease deal.

Personal lease

What is seen as a bad credit score?  

It is difficult to put an exact number on a bad credit score. This is because the three main credit reference agencies – Experian, Equifax and TransUnion – all use slightly different scoring systems. MoneySuperMarket’s free credit monitor service uses TransUnion credit scores. 

But in all cases, the lower your number the worse your credit score. Different lenders also have their own criteria for who is a bad credit risk. So, if one lease company turns down an application because you have bad credit, another may take a different view. 

You should tread carefully though because too many applications for credit over a short period can result in damaging your credit score further. Our guide gives more details on what is a bad credit score

What to consider before leasing with bad credit? 

If you have bad credit, there are several things to consider before you take out a lease. 

Do you need the car? An obvious question but an important one. While having a car is handy, is it essential for your day-to-day life and work? Remember leasing is only part of the cost. You also have running costs such as insurance and fuel. 

Can you afford the repayments? Do your finances allow you to afford the lease month-on-month? Make sure you have enough in your budget and factor in other expenses that might crop up. 
Have you got a good to excellent credit score? It’s worthwhile checking your credit score before you apply for a lease deal. There are lots of free, accurate credit score reporting tools online that will give you a good indication of whether leasing is right for you.

Can I get a car leasing deal without a credit check?

It is unlikely you’ll be able to get a car leasing deal without having a credit check. It’s a stipulation of the Financial Conduct Authority (FCA). Your credit score is taken into account when the lender decides whether or not to provide the finance for your lease vehicle – and at what interest rates. 

Will my credit score increase if I make my repayments on time?

If you make your repayments on time and in full each month your credit score should improve over time - meaning you should be able to access better car leasing deals in the future.  

It’s important not to miss any payments or make late payments as this could have the opposite effect and lower your credit rating even further. 

What are the alternatives to car leasing with poor credit?  

There are alternatives to car leasing if you have poor credit, although you may find you are not offered the best deals. 

Car loan: You may be able to find a personal loan for bad credit that would allow you to buy a car outright. You would then pay back the cost of the loan – with interest added - in monthly instalments over a fixed term.  

Hire purchase: You make monthly repayments and once you've made the last payment you will own the car. This helps spread the cost, but instalments are likely to be higher, making it more difficult to be approved if you have bad credit. 

Personal contract purchase: PCP is similar to leasing, but at the end of the contract you can make an optional final payment –known as the ‘balloon payment’ – to buy the car outright. Alternatively, you can return the car and walk away or start another PCP plan on a new car. 

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