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Can you lease a car with bad credit?

Can you lease a car with bad credit?

We talk a lot about buying a new car with bad credit but we don’t often mention leasing. As Car Nation Canada also leases new cars, it makes sense to cover that too. So can you lease a car with bad credit?

Yes you can.

Like buying a car with a loan, your options may be more limited than if you had a perfect credit score but you have more options now than at any time before.

Car leasing with bad credit

One of the few good things that came out of the financial crash was that financial institutions finally accepted that bad credit is not the end of the world. They learned that lots of people can get into trouble, often through no fault of their own and that people will often do anything to make it right.

This means there are now more bad credit car loan and leasing options than ever before.

In a typical car lease, you rent the car for 36 or 48 months. The two main considerations of a lease is the value depreciation of the car and the interest rate.

Depreciation is known as amortization and is the calculation of the car’s value new versus the its projected value at the end of the lease. For example, if the car you want to lease costs $35,000 and is projected to be worth $25,000 after 36 months, your lease payment needs to cover that $10,000 loss in value.

The basic cost of your lease is usually that amortization value and a little to cover costs and administration. Plus the interest.

There are other factors such as processing, security deposit, capitalization reduction, gap insurance and disposition fees but they are less of an influence than amortization and interest.

Car leases

Car leasing companies are like lenders when dealing with credit scores. The higher your score, the less of a financial risk you appear to be, so the lower the interest you are charged. The lower your score, the more financial risk you are assumed to pose, the higher the interest you are charged.

It’s all done by algorithms but there is more of a human touch possible when required. Brokers, Buy Here Pay Here dealerships and more sympathetic leasing companies can all offer good value deals for those with bad credit.

You can lease a car with bad credit but you will pay more interest. What can make a difference is working with a dealership that will fight your corner to get you a good deal. A dealership such as Car Nation Canada.

Contact us to discuss your leasing options. We would be happy to help.

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