- What can affect my credit score?
- Will funders use my credit score?
- If I have bad credit do I have to use a broker?
- Can I lease a company car with bad credit?
So, you’ve got concerns about your credit rating but you want to lease a car. Is the game over before it’s begun?
It’s likely that, at this point, you think you’re never going to get the car you want or need.
If you have bad credit then we have some good news for you. Bad credit car leasing is actually a thing. You might still be able to lease a car despite having a less-than-perfect credit score.
We can hear you asking “How is that possible?” from here. In this article, we take a look at the options available to you.
What can affect my credit score?
There are a number of things that can have an effect on your credit score, both good and bad. If you get a detailed credit report you will be able to see what is affecting your score and if you are likely to have a low or high score.
- If you make your bill payments on time
- The amount of debt you already carry (personal loans, credit cards, catalogues)
- If you appear on the electoral roll
- How long you’ve lived at your current residence
- If you have a credit card
- If you have a mortgage
- If you have late or missed payments
- If you’ve used more than 30% of your available credit
- If you have a Default on any financial agreements
- If you have any CCJs
- If you are in an IVA
Do funders work on credit score?
It depends. Due to its efficiency, most lenders have an auto-approval system which uses a credit score to make a decision. So, if you have a great credit score you will be accepted just like that. At OSV we have known people who have a great credit score (above 960) who also have a £40,000 CCJ that still get approved instantly. Admittedly, this will vary, depending on the funder.
However, if you don’t get instant approval, then your credit score will be looked at by a human, this will include all the details found in your credit report, such as your payment history, and how much borrowing you have.
There is a chance though that if you have defaults that date back five and a half years funders may still approve you. If they don’t, you can always get a short term lease, but more on that later.
If I have bad credit do I need to go through a broker to lease a car?
If you have bad credit, then sometimes going through a broker becomes your only option. Dealers usually only have prime funders (one funder they use), whereas some established brokers will have access to more specialised funders who are prepared to offer finance to someone with a bad credit rating.
When you’re choosing the broker you want to get your vehicle with, you should ensure that they are reputable, that they are asking the right questions and understand your circumstances fully. If they don’t do this then it’s possible they will end up going through multiple credit searches, which will reduce your credit score even further. It’s important that you get the best advice you can from an experienced broker who you find trustworthy.
Does bad credit car leasing = a cheaper car?
Sometimes, but not always.
If your dream is to have a luxury car but you have poor credit, you don’t need to completely discard that dream. There will be some restrictions that apply, but they’re not always as bad as you might think.
Naturally, you’ll be a higher risk to the funder, which could mean that your monthly payments are higher. However, as long as you have a regular, secure income, there’s a great chance that you’ll get approved.
This means that your dream of driving away in your dream luxury car could still be within reach.
The most important thing you need to remember is that Financial Conduct Authority (FCA) regulations require all lenders to provide evidence that any loan you are given is affordable to you.
What would be the cheapest car with bad credit?
The important thing to remember is that you need to be open to the options that your broker presents you with. The cheapest car you can get depends on a number of things including the amount of discount that is available on the vehicle.
Most specialist funders will ask for a larger deposit if you have a poor credit score. This gives them peace of mind just in case you are unable to make a payment.
Who can lease with bad credit?
It’s true, not every dealer or broker will be able to help you if you have bad credit, in fact, some will run a mile the moment you tell them that you have a poor or low credit score. This is not because of any stigma attached to bad credit, but more because they either don’t have the knowledge or experience to help you, or they don’t have the contacts.
There are car dealers and brokers who work with specialist finance houses that deal with bad credit car leasing. These car dealers and brokers will have the experience needed to help you.
The most important thing when you are speaking with a car dealer or broker is to be honest with them right from the start. Not only will you gain the respect of the dealer or broker, but the whole process will be so much easier for you.
Can I get a lease for a car in someone else’s name if I have a poor credit rating?
If you have a bad credit score but you know someone who doesn’t, leasing in their name is an option. However, there are a few things you should know before you consider this.
There are some funders, such as Mercedes Finance, who will reject someone in your household if you have been declined, even if they have a perfect credit score.
There is also the option to lease through a friend. The car will be in your friend’s name and they will need to be the policyholder and a named driver on the vehicle insurance. Ultimately, the car would be their responsibility, and this is something that they would need to be comfortable with.
Another option that you could consider, is leasing with a Guarantor.
Short Term Rental with bad credit
If you’re six months away from having a CCJ fall off your credit history, a short-term rental could be your best option.
You can lease a car from anywhere between 1-12 months and this means you only have to pay the higher price for a shorter amount of time. After that time is up and your CCJ has dropped off your credit history, you can switch to a long-term lease.
Of course, when you make the short term rental payments on time, your credit score will gradually start to increase. So it’s a win-win really.
Essentially, the success of car leasing with bad credit depends on you and the situation you’re in.
If you’re a homeowner and/or you’ve had the same job for a while it’s easier to help you if you have bad credit.
The most important thing to do when you start the search for your new lease car if you have bad credit (or good credit) is to make sure you choose a good dealer or broker who has the experience and the contacts to help you and make sure you can lease the car you’ve always wanted.
- Tax benefits and implications of business car leasing - 8th April 2021
- Business car leasing eligibility - 7th April 2021
- Business car leasing credit requirements - 6th April 2021