How to lease a car with a bad credit rating

If you have bad credit, it can be quite a daunting experience looking for a new car – especially if you want to lease.  

The anxiety over whether you’ll be accepted, how much you’ll have to pay for the privilege if you are, and the concern that you may not end up being able to get the car you need.

However, just because you have bad credit doesn’t mean you can’t lease the car you want. And this guide will show you how. But first, the basics. 

What is bad credit? 

Bad credit is often a reflection of a low credit score. Your credit score is a tool lenders use to decide whether to give you credit – such as a car lease. 

Your credit score can be negatively impacted in several ways. Missing payments on bills, not being registered on the electoral roll, moving home frequently, being tied financially to someone with bad credit, using over 50% of your credit available; they’ll all lower your credit score. 

How does bad credit affect a car lease application?

Bad credit impacts a car lease application – or any finance application, in fact – because it makes it harder to get accepted by a lender. 

If you have bad credit, you’re deemed as more of a risk to the lender. Therefore, they’re less likely to accept your application. 

And if you do get accepted, your interest rate will likely be higher than if you had good credit. Therefore you’ll have to pay more. 

How do I check if I have bad credit?

It’s easy to find out if you have good or bad credit as it comes from your credit score, which you can easily access online for free through several providers. 

Companies like Experian, TotallyMoney, ClearScore, and Credit Karma are just four of many which will provide your credit score for free.

Then, once you know how lenders view you, you can make changes if needed to help improve your score. 

However, it’s important to note that not all lenders use the same credit reference agency to make their decision. 

Some use Experian, while others use Equifax or TransUnion. If you look at all three, then you may get a better idea of your score. 

9 ways to improve your credit score 

If you’ve found your credit rating and want to improve it, there are several things you can do. 

1. Keep up with payments

If you already have credit or household bills in your name, you need to make sure you keep up with payments. 

Missing payments is one of the biggest causes of a bad credit score, and if you miss too many, it’ll severely impact your credit rating because you’re indicating that you can’t manage your finances. 

2. Don’t apply for too much credit

When you’re looking for a new car, it can be tempting to apply to as many different car finance companies as possible and see which one comes out best. 

However, too many finance applications in a short period can damage your score. 

If you’re going to apply for finance at a few different places, make sure they use a soft check – as we do here at Zero Deposit Car Leasing. 

That way, your application doesn’t appear on your credit file and won’t harm your score. 

See if you’ll be accepted for car finance without affecting your credit score in minutes.

3. Register to vote

If you’re not already registered to vote at your current address, add your name to the electoral roll. 

It’s a quick process online but can substantially boost your credit score. 

4. Don’t move home too often

Understandably, staying in the same home for a long period isn’t always under your control. However, if you can avoid it, don’t move home too often.

If you do, it’ll suggest your life isn’t stable and that you may not be reliable when it comes to repaying a loan. 

5. Cut links with people with bad credit

Again, not always in your control, but you should try and avoid financial ties with those who have bad credit. 

Once you enter an agreement with someone with bad credit, their credit then becomes part of yours, which can lower your score.

6. Close any unused accounts

If you have a bank account that stood dormant from when you were younger, perhaps, close it. 

If a lender sees you have several accounts open at once, then they’ll be more reluctant to let you open another. 

7. Pay off any credit you can

If you only make the minimum payment each month on a loan or credit card, then it’ll look as though you’re on your financial limit. 

If you can, pay off as much credit as you can as quickly as possible – albeit not so much that you run into financial difficulties or spend more paying early repayment charges. 

8. Don’t use more than 50% of your allotted credit

If you already have a line of credit open – a credit card or overdraft, for example – try not to use more than 50% of it consistently. 

If you do, it’ll have a detrimental impact on your score. 

9. If you have no credit history, build one

A person with no credit history will likely have a similar score to someone who has bad credit. 

That’s because you haven’t proven you can manage credit yet. 

If that’s you, look to build a credit history. Getting a phone contract, broadband, or a credit-builder credit card will all help – as long as you keep up with your monthly payments. 

Can I lease a car without car finance? 

Yes, you can lease a car without car finance. You won’t be eligible for personal contract hire (PCH) or personal contract purchase (PCP), as they have to come from the car finance lender. 

However, you can use a hire purchase (HP) agreement. 

A hire purchase agreement is simply where you spread the cost of a purchase evenly over several monthly repayments. In car terms, it usually lasts between 36 and 60 months. 

So, instead of using a lender through your car broker – such as one of our lenders here at Zero Deposit Car Leasing – you can look to finance it in other ways. 

Credit card

If you have the limit available, you could buy the vehicle outright using a credit card.

However, once any introductory rate expires on your credit card, you may find it more expensive than if you chose to lease. 

Personal loan

Another option is using a personal loan from a bank or building society. Like a hire purchase agreement, the monthly repayments will be fixed for a period of time so that you can budget accordingly. 

However, it’s worth noting that it’s often more difficult to be accepted for a credit card or personal loan than it is for car finance. 

What to watch out for

If you have bad credit, make sure you watch out for brokers and lenders using an initial hard search to find you a deal. 

If you have too many searches in your name or get declined, it’ll be noted on your credit file for other lenders to see. That may then put more lenders off lending to you. 

Here at Zero Deposit Car Leasing, all our initial checks are soft, so you can find the right lender for you without affecting your credit score.

Also, if you have bad credit, you may end up having to pay more each month than you would have if you had good credit. 

If that’s the case, make sure you’re comfortable with your monthly payments before agreeing to the deal. 

If you miss any payments, not only will your credit score be affected, but your vehicle may also be repossessed.

How to lease a car with a bad credit rating

Applying for a car lease is the same if you have good or bad credit, and here at Zero Deposit Car Leasing, it only takes a few minutes to find out whether you’ll be accepted. 

Using our car lease eligibility checker, you input a few details online, and then we work with our large panel of lenders to see which one best fits your circumstances. 

Even if you have bad credit, we work with several lenders who specialise in helping those with less than perfect credit. 

And, all our initial checks to help find you the best deal are soft, meaning they don’t appear on your credit file or harm your credit score. 

Then, once you have your approval, it’s as simple as finding your car, agreeing to a monthly payment that works for you and then enjoying your new vehicle.