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Whenever anyone leases a car, they’re subject to a credit check. It’s a stipulation of the Financial Conduct Authority (FCA) and it’s there to protect all parties - and your credit score could dictate whether a lender will be happy to provide the finance for your lease vehicle.
While credit can impact your ability to lease, there are ways to lease a car with poor credit when other factors are taken into consideration.
You can get a copy of your credit report from reference agencies such as Experian, TransUnion and Equifax, and it’s essentially a break-down of whether or not you’ve been able to service your debts efficiently over time. If you’ve been slipping into your overdraft repeatedly or failing to make the payments on your credit card each month, that’ll negatively affect your score, as will having lots of existing finance agreements.
But if, on the other hand, you’ve been paying the full balance on your credit card each and every month while paying all of your bills on time, your financial habits will positively affect your score.
Different firms have a different scoring system. With Experian, for example, it runs from 0 to 999 and you’ll need a score in excess of 800 to pass the initial credit check to secure your leasing deal.
However, there’s also likely to be some wriggle room and other factors can be taken into consideration. And it all comes down to affordability - weighing-up how much money is coming in compared with your outgoings on things such as your mortgage, credit card, personal loans, childcare costs, and credit cards.
If you have poor credit, you’ll need to prove beyond doubt that you can realistically afford your monthly leasing payments for the duration of your contract.
Another option you might consider is increasing the size of the ‘initial payment’, thereby reducing your monthly leasing cost while also reducing the risk for the lender.
Some leasing firms might also allow a ‘guarantor’, who is appointed to take responsibility for your monthly payment should you find yourself in difficulty and unable to pay on time. Any such guarantor would need to have an exceptional credit score in order to qualify.
You may also be able to take out a ‘joint lease’ - whereby you and a partner or family member pool your resources, and credit scores, to secure a lease vehicle that you intend to share.
If you’re a young adult still living with your parents, you may not have a credit score to speak of at all. In those circumstances, you’ll need to prove to the lender that your monthly income puts you in a position where you’re comfortably able to pay the monthly leasing costs.
You’ll also need to provide proof of a consistent address, consistent employment and you may also still need to have a ‘co-signer’ on the loan, such as a parent, with a good credit score.
Leasing a vehicle should not hurt your credit score overall, so long as you make the contractual payments on time and in full. The initial hard credit check carried at at the begin of the process can cause a small, temporary drop in your credit score, usually affecting your score for 12 to 24 months.
Falling behind on payments, or defaulting on lease payments can negatively impact your credit , which is why Select requires a credit check, and/or alternative reassurance such as a guarantor. Ensuring that you can meet monthly payments is crucial to protecting your credit score while attaining your lease vehicle, and should be carefully considered before committing to a leasing contract.
If you’re confused or unsure about any aspect of leasing a car, give the Select Car Leasing team a call on 0118 467 9189
If you’re thinking of getting a new vehicle, there are four main finance options typically available. To help de-mystify this often confusing area, we’ve summarised each finance type, explained what it is and if it might suit you, along with a list of the key pros and cons.
Just like buying a car, when leasing you’ll need to obtain fully comprehensive car insurance* to protect not only you and your property but to also protect other people and their property as well. It's also worthwhile in considering key insurance - it's a great peace of mind service for replacement of keys and locks in the event they are either lost or stolen.
You want to get a brand-new car but are a little unsure what’s the best way? Buying and leasing a car both have their advantages and disadvantages – read our informative guide below to determine which is right for you.
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When applying for a lease car, you'll be subject to a credit check to protect all parties, and a poor credit score could change whether a lender will be happy to provide the finance for your lease vehicle. However, there are alternatives in the event of poor or no credit, ranging from an increased initial payment cost, to a guarantor who can take responsibility for the monthly payments should you be unable to pay at any time.
A leasing consultant will be able to tell you more, based on your individual circumstances, reach out to one of our leasing experts on 0118 920 5130.
It is possible to lease a car with an IVA, however it may be a more complicated process. You'll need to co-ordinate with the company managing your IVA in demonstrating a genuine need for the vehicle, such as a vehicle being required in order to work.
You may also need to find a specialist lender who has experience in leasing with IVAs, your leasing consultant should be able to provide more information about which lenders are able to address your requirements.
While it may be more challenging to lease with a CCJ, it is possible, though you may have to pay a higher initial payment fee to accomodate the increased risk. To find out more, it may be best to chat directly with a leasing consultant, who can look at your individual circumstances and let you know if leasing is the right fit for you.
Credit checks will be carried out in order to assess the suitability of a lease, however if you don't have a credit history, there are alternatives you might want to consider.
Alongside proof of consistent address and employment, you may need a co-signer, such as a parent with a good credit score, or a guarantor who can take responsibility for your monthly payments should you find yourself unable to pay on time.
Generally, finance companies will respond with an answer to a credit application within 24 to 48 hours, however this can take longer if additional information is required.
Leasing contracts with guarantors or a joint application can be accepted, however they are looked at on a case-by-case basis, with the final decision made by the finance company. To find out if you might be eligible for a joint application lease, chat with one of our expert leasing consultants on 0118 920 5130 to discuss your circumstances.
