A person handing car keys to a couple who are sitting in a car looking happy.

Can You Lease a Car with Bad Credit?

7 min read

Published January 9, 2025

Table of contents

Key Takeaways

It’s possible to lease a car with bad credit, but it could be more costly for you.
You can increase your chances of lease approval by making a large down payment or getting a cosigner.
If you have bad credit, your best bet for getting approved with favorable terms is to stay on top of your credit score before applying.

Leasing a car gives you possession of it for a fixed period in exchange for a monthly payment. Think of it as renting a car the way you would an apartment. Compared to buying, leasing a car usually means lower monthly payments, more vehicles to choose from, and no resale worries. Depending on your lease agreement, you may not be responsible for most repairs or maintenance costs. These benefits make leasing an attractive prospect to some buyers.

Curious about how leasing works? You pay a security deposit or down payment followed by monthly payments for the duration of the lease. Your monthly payment depends on the car's depreciation. Depreciation is the difference between the car's current value and its value when the lease expires. Your monthly payment includes interest (sometimes known as a rent charge) and fees.

Your credit score determines whether you’re likely to be approved for a lease. Here’s what you need to know about leasing a car with bad credit.

What is the minimum credit score required to lease a car?

Like banks and lenders, car dealers usually prefer applicants with good credit. Good credit scores indicate responsible financial habits and make you a reliable lease candidate. A leasing company pays close attention to your credit history. Do you make monthly payments on time? Are your credit cards paid in full every month? Have you missed any payments lately? These are typical considerations for car dealers or leasing companies. Your credit score also affects your monthly payments, specifically by determining how high or low your interest rate will be.

What to consider before leasing a car if you have bad credit

A good credit score opens the door to better contract terms like lower interest rates. A low credit score may negatively impact the terms of your lease.

Leasing companies take a risk when they approve customers with poor credit, so they may charge these customers higher interest rates to offset the risk. These interest rates are known as the “lease factor” or “money factor.” A lower credit score usually means a higher lease factor.

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You may also be required to pay a larger down payment if you have bad credit. Remember that, on top of these costs, you’ll be responsible for several other fees and taxes associated with leasing a car. If you do get approved to lease a car with bad credit, it may be more expensive in the end. A low credit score may also mean you have fewer options when picking out the car you want. The make and model you want may only be available to those with higher credit scores.

Since leasing a car is basically renting it, you don't build equity with each payment. Once your lease term expires, you don't have any monetary value to apply toward the car or even a new lease.

Alternatives to leasing a car when you have bad credit

A bad credit score may prevent you from getting approved for the lease or the terms you want, but you can explore other alternatives. Lease transfers, used cars, and special financing are all potential options.

You may be able to take over someone else's lease if you apply for a lease transfer. If you’re approved, you'll be responsible for continuing the payments, and you’ll be held to the original lease terms. To be eligible, you'll need similar credit to the original leaseholder.

If you have bad credit, you may qualify more easily for a used car loan than a car lease. It may be possible for you to purchase a used car for cheaper than you’d pay to lease a car. That may also mean you have less to finance, which could result in lower interest.

Some car dealerships have special financing departments to support people with poor credit. The right financing plan may allow you to lease a car, though you may still pay a higher interest rate.

Renting a car through a ridesharing service may be the solution if you’re also interested in a potential side job. If you choose this option, some benefits may include low rates, short-term contracts, insurance, unlimited mileage, and roadside assistance.

How to improve your chances of lease approval

There are steps you can take to increase your chances of getting approved for a car lease if you have a poor credit score. Here are some things you can consider:

Work on your credit score

Positively impacting your credit score is your best chance at improving your odds of securing a car lease with the most favorable terms. To show your creditworthiness, you should always pay your bills on time. If you need help making sure you never miss a payment, you can set up automatic payments, alerts, or reminders. Responsible credit card use can go a long way toward helping your credit score. Avoid carrying a balance on your credit accounts by paying your credit card bill in full and by the due date every month. If you must carry a balance, try to stay well below your credit limit.

Staying on top of your credit score and checking your credit report regularly are good habits to form along with responsible credit card use. Many credit card issuers allow their customers to see their credit scores for free.

Did you know?

If you’re a Discover^® Cardmember, you can get a free Credit Scorecard with your FICO^® Score and important information behind it, like credit utilization, number of missed payments, number of recent inquiries, length of credit history, and total number of accounts.¹

Keeping a close eye on your credit report helps you spot any discrepancies that may be affecting your credit score. You can access your free credit report weekly from each credit bureau at AnnualCreditReport.com.

Lastly, keep your credit applications to a minimum. Too many hard inquiries can affect your score.

Make a down payment

One way to increase your approval odds is to make the largest possible down payment. This is called capitalized-cost reduction, and it acts as a show of good faith to the lender. It can also lower your lease amount and monthly payments.

Consider getting a cosigner

A cosigner with good credit could help you qualify for approval. You can reap the benefits of your cosigner's good credit and receive favorable terms in addition to approval. Make sure both you and your cosigner know that the cosigner is responsible for paying if you miss payments. If that happens, their credit may be negatively impacted.

Weigh your options

When applying for a loan or credit card, you explore different options to make sure you choose the best deal for you. Researching and comparing options is just as important when trying to lease a car. Shop around multiple dealerships to find one where you’ll be more likely to qualify for a lease. Consider where you might also receive the best possible terms for your credit score.

Good financial habits are essential for building a strong credit history. You can help your credit score with responsible spending, timely bill payments, and low credit balances. Good money and credit management habits show dealers you’re a low credit risk, allowing you to qualify for better approval odds and terms.

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