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Bad Credit Car Leasing

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

published: 27 June 2022
Read time: 5 minutes

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 can be more cautious about approving a deal in case you cannot keep up with the repayments. 

Can I get a car leasing deal with poor credit?  

You should usually still be able to get a car leasing deal even if you have a lower credit score. But you may have to opt for a car of lesser value. The most expensive makes and models may not be available to you if you have a poor credit rating. 

You may also find that the leasing contract you’re offered is more expensive, meaning your monthly payments are higher. This is because the lease provider may see you as higher risk – and will be looking to cover any potential risk that you might miss the repayments. 

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. 

What type of car do you want? If you have bad credit, your choice is likely to be more limited, but still give it careful consideration. The make and model will affect the price you pay, but there are also practicalities to think about such as making sure the type of car is right for your needs. 

How much will you pay upfront? You’ll probably have the choice to pay a lump sum equivalent of one, three, six or nine months of the fixed lease price for the car. The higher the upfront payment, the lower your remaining monthly payments will be. 

How long do you want the lease to be? You’ll usually be able to lease a car for two, three or four years. Monthly payments are cheaper for longer contracts, but if you lease for more than three years, you’ll need to pay for an MOT. 

How many miles will you drive each year? You’ll need to specify your annual mileage, from 8,000 miles up to 30,000, for example. A higher estimated mileage will increase your monthly payments, as cars lose value the more they’re used. But if you end up driving further than you estimated mileage, you could face a penalty charge. 

What are the disadvantages of leasing a vehicle with a bad credit score? 

There are a number of downsides to consider with car leasing if your credit rating is low. Here are some: 

  • You might not get as cheap a lease deal as you would with a good credit score 

  • Your choice is likely to be limited. You might only be able to lease cars of lower value and lower specification 

  • It could be expensive if you breach the terms of the leasing contract, such as the maximum allowed mileage or if you incur too much wear and tear to the car 

  • You won’t actually own the vehicle at the end of the deal  

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 just as with leasing 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. 

Compare car leasing for bad credit with our partner MoneyShake

Even if you have a bad credit score you can search for car leasing deals with us.  We’ve teamed up with car leasing experts Moneyshake to bring you car finance deals from 23 leading UK leasing companies. 

You can compare in-stock lease vehicles to get a car quickly, and refine your search depending on your monthly budget, preferred contract term, anticipated mileage and type, make and model of car. 

We’ll help you compare quotes, so you can find the perfect deal for your needs. Your chosen car will typically be with you within four weeks – and the deal includes free road tax, warranty and home delivery. 

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