Do you need good credit to lease a car?
Not necessarily. We work with specialist funders to help drivers with bad credit, so you might not get turned down based on your credit rating. However, further clarification about your financial status may be requested to offer more assurance that payments will not be missed.
Why is a car lease credit check needed?
Leasing a car is a form of credit, as the driver is being entrusted with a vehicle worth thousands of pounds, while only being required to pay a fraction of its worth on a monthly basis.
Credit companies view a lease deal in a similar way to a loan. However, rather than the loan amount being the same as the value of the car, it will be equivalent to the total amount of payments.
Performing a car lease credit check is one of the ways that a finance company can determine if you are financially stable enough to be able to pay the monthly instalments.
What will finance companies see on my credit report?
Generally, funders will look at:
- Your full name, date of birth and current address
- Your financial history over the past six years, including previous credit limits, mortgages, loans, overdrafts, bankruptcies, CCJs or debt issues
- Electoral roll information
- Financial links to other people
- Whether your identity has been used for fraud
We would not want somebody to take a lease out which they could then not comfortably afford.
To find your credit report, you can use one of the three main credit referencing agencies in the UK: Experian, Equifax and TransUnion. It is difficult to compare their scoring systems directly, as they each rely on separate criteria, but the final score they produce will be easy to understand.
Will leasing a car improve my credit score?
The simple answer is: yes, it could. However, you should remember that you must keep up all payments and make them promptly and improving your credit score takes time.
At first, a new lease contract may have a negative effect on your score. This is simply because more credit is being placed onto your credit file. But as long as you continue to pay the monthly instalments on time and without any issues, this should gradually improve your credit rating. In turn, this should make it easier for you to request credit from other organisations in the future – and end up with a better deal, next time.
Tips for leasing a car with bad credit
While leasing a car with bad credit is still possible, it is more difficult to meet the specific requirements.
As a general rule, most finance companies ask that applicants have a credit score that is somewhere between ‘good’ to ‘excellent’ in order to be successful. Most ratings range between five different categories, usually starting at ‘very poor’.
So, what can you do to lease a car if you have bad credit? Read our top tips below to improving your chances of securing a good deal.