Best minivan Lease

Can you lease a car with bad creditPolka dot images/getty

Benefits of leasing a car include lower payments (plus some fees), as you’re just financing the portion of your car’s depreciation that’s going to occur during the lease term. You’ll also be in a new car with a warranty that will likely cover any unexpected problems during the lease term.

Those great lease deals that you see advertised, however, are reserved for customers with excellent, or tier one, credit. But with some research and preparation, you still might be able to get into a fair lease deal, even with bad credit.

The first steps are understanding just how good (or bad) your credit score really is, ensuring that the score is accurate, and attempting to improve it. It’s not unusual to have a seller exaggerate the depth of your credit issue in order to get you to pay more, so the more you know about your situation, the better.

If your credit is truly challenged, you’ll likely have to pay a higher interest rate on your lease plus put down a higher down payment, and perhaps a security deposit will be required (it may be returned at the end of the lease).

Before you start shopping at dealers, do your research into what might be available to someone with your credit score. Then shop dealers for the best price and the best financing deal, crunching all the numbers yourself to ensure their accuracy and affordability. Be sure to take all of the fees and charges into account.

Watch what cars are selling and not selling, and look for vehicles that will soon be replaced with updated models. Dealers are more likely to make a deal on a vehicle that they’re worried may be stuck on their lot for an extended period of time.

If you’re still having trouble qualifying, there are a couple of other options, but both should be approached with some trepidation.

Many lessors will accept a co-signer on the lease. A co-signer simply agrees to the payment terms and will be held responsible for the payments if you don’t pay. If you both don’t pay, the car will be repossessed, and both of you will end up with damaged credit. You’ll each be liable to pay for any value deficiency the leasing company has when they dispose of the car.

Sometimes people need to break their leases, and this can be an opportunity for someone else, even with challenged credit, to be able to get into a lease. Through a mechanism called a lease swap, you take over the remaining term of a lease from another party. You’ll still have to pass a credit check, but underwriting standards tend to be lower for the person taking over the lease.

If you’re interested in pursuing a lease swap, check out the websites LeaseTrader.com and Swapalease.com for more information. Before entering into a lease swap agreement, be sure that you understand all of the costs involved in the transaction.

As with all car buying or leasing transactions, it’s knowledge about your specific situation and about the precise vehicle that you’re interested in that helps you get the best deal.

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