Leasing a Car With Bad Credit: Is It Possible?


Leasing a car is an excellent option if you don’t wish to own a car. It provides more options to choose from, and you don’t need to worry about resale. But like any other lease, you must meet specific requirements. But can you lease a car with bad credit? This article addresses this question and presents tips on how to improve your credit score to lease a vehicle.

Can You Lease a Car With Bad Credit?

It is possible to obtain a car lease if you have poor credit. The credit score required to lease a car varies from one car dealer to another. Some dealerships provide easy lease options to those with poor credit, while many have strict requirements.

Good credit, however, makes it easy for you to qualify for a lease—demonstrating to the car dealership that you use credit responsibly, manage your money efficiently, and make lease payments on time. Such financial management behavior reduces the lender’s risk and turns the lease terms in your favor.

Although there is no minimum credit score for a car lease, most dealerships check your industry-specific FICO auto scoresranging from 250 to 900—and provide an in-depth assessment specifically for an auto loan. Apart from credit scores, the car dealership is also likely to consider your income or previous car leases.

NOTE: As per Statista, the average credit score needed to purchase a used car was 660 in 2020. This is the reason most prefer leasing a car over purchasing.

Leasing a Car With Bad Credit

If, with bad credit, you’re approved for a loan, consider the following before signing the lease.

High-Interest Rate

Most lenders give a high-interest rate for those with bad credit, considering the financing cost of a monthly lease payment, a method known as the money factor (lease factor). The lower your credit score, the higher the money factor. You will pay more than you would have if you had a good credit score.

Lease Here Pay Here (LHPH)

The LHPH model is typically used if one cannot get approved for any other loan type but still wish to lease a car with bad credit. But dealerships usually use this form of lending for used vehicles. And, unfortunately, interest rates are typically very high and don’t cover repair costs. Dealerships also ask for a sizable down payment and weekly or biweekly payments.

Auto Insurance Required

You must obtain insurance on your leased car, regardless of a poor or fair credit score. The insurance cost varies from one provider to another, depending on the credit amount. And some auto insurance companies don’t check credit scores, while others consider it essential.

Alternative Options

When considering how to lease a car with bad credit, consider the following (even alternative) options.

  • Down Payment

A down payment is one of the few upfront costs that can increase your chances of leasing a car. While the exact down payment required varies, try saving money to make a large down payment before signing a lease—it will not only lower monthly payments but can also increase your chances of getting approved. You can also seek the help of auto financing if you have bad credit to fund the down payment.

  • Lease Transfers

Also known as a car lease swap, you can take over someone else’s lease if you get approved, paying the remaining lease payments of the previous driver and abiding by the original lease terms. A lease transfer is one of the best options for those who wish to lease a vehicle with bad credit. But you must have a credit score close to the original lease owner to qualify for lease transfers.

  • Car-Sharing Services

Car-sharing services have become extremely popular among those who don’t wish to buy a new car. You can rent a car for a few hours or a few days. It does, however, require a security deposit. But you can easily opt for this option if you have poor credit and only need the car for a few days. Uber and Lyft are a few famous companies providing car renting services worldwide.

  • Used Cars

Most would opt to lease one of the newest models of vehicles. Leasing makes auto financing easy, covers most repair costs, and is affordable compared to buying a new car. But if you don’t have the appropriate credit score to lease a car, you can search for good used cars, which are more available and have low-interest rates. Make sure, however, you opt for an extended warranty on a used car if available, and choose a car warranty only from reputable companies. The only drawback with a used car is that dealerships may not cover the repair costs, leaving them to the leaseholders.

  • Cosigner

If you have bad credit, you can ask a family member or friend who has good credit to cosign the lease, reducing the risk for the car dealership. But you should understand the terms of the lease beforehand because the cosigner also has the legal requirement to pay for the car if the lessee cannot fulfill their obligation.

Key Takeaways

Bad credit car leasing is possible, but a credit score varies from one dealership to another.
Dealerships may charge a high-interest rate if you have poor credit or lease you a car via the Lease Here Pay Here (LHPH) method.
You can consider other options if you have bad credit, such as paying a high down payment or lease transfers.
Many opt for car-sharing services, lease used cars, or a cosigner when they have bad credit.

Credit Score Improvement Tips

Improve your credit scores. While there is no minimum credit score to lease a car, good credit will help you qualify for other types of loans.

Spend within limits

The best tip to improve your credit is to spend within your limits. So don’t go overboard on your next shopping spree and make responsible decisions when spending money.

Pay bills on time

Paying your bills on time—including income taxes—can do wonders for your credit score. It shows that you’re financially responsible and establishes a history of on-time payments, significantly improving your credit score.

Don’t surpass the credit limit

Your credit utilization ratio shows your available credit and how much of it you use, which could harm your credit score and make it difficult to lease a car with bad credit. Therefore, you must not go over your credit limit and even keep it at the lower end.

Obtain a credit-builder loan

Many banks offer credit-builder loans, especially if you have poor or no credit. In most cases, banks hold the amount borrowed in a bank account while you make payments, building credit. You pay the interest and principal amount in regular installments, which serves a dual purpose: you improve your credit score and build your savings.

Hire a credit repair company

Credit repair companies can help you improve your credit scores. These companies have experts who scrutinize your credit history and find the best suitable option for you.

NOTE: It’s difficult to buy a car with bad credit. If you have poor credit, leasing might be the best option for you.


Car leasing with bad credit is possible—although you may be charged a high-interest rate. If you have bad credit, several options are available, such as a more sizable down payment, lease transfers, or obtaining a cosigner to lease a car. Despite the available options, you should focus more on improving your credit by paying your bills on time, keeping your credit utilization ratio at the lower end, or hiring a credit repair company to help you.


Can you lease a used car with bad credit?

Not only can you lease a used car with bad credit, but it’s advisable since the required credit score is relatively low for used cars.

Is it easier to lease a car with bad credit?

No bad credit can make it difficult for you to lease a car. You should, however, have good credit to get a good lease for a vehicle.

Can you lease with bad credit?

Can you lease a car with bad credit? Yes, it’s possible—although the lease terms may not be in your favor.


I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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