Leasing a car is essentially taking out a type of loan. When you lease a car, you are renting it for a monthly fee for the term of the lease that is agreed with the lender.
At the end of your lease’s term, you then simply return the car and go your own way. However, if you are thinking about leasing a car, then there is one crucial factor that you need to think about, and that’s your credit score. It is ultimately going to influence whether you secure the car lease or get rejected. Luckily there are many different bad credit car leasing companies out there that consider drivers with a bad credit rating. But, you still need to be aware of a few different factors when it comes to making an application and securing a car lease. Keep on reading to find out what these are.
How to check your credit score
Checking your credit score plays an essential part in maintaining your overall financial health and the first step to take before you apply for a car lease. Checking your credit score incredibly easy and the reports are compiled credit references agencies. The 3 main agencies in the United Kingdom are Experian, Equifax and Callcredit. The general rule of thumb is that the higher your credit score is, the higher your chances are of securing the best credit deals. However, one important thing to be aware of is that receiving a good credit report is no guarantee that any credit application will be accepted.
Leasing a car can improve Your Credit Score
Leasing a car can be a great way of improving your credit score as long as you make your monthly payments on time and in full. However, one thing to be aware of is that improving your credit score takes quite a bit of time and that securing a new car lease might actually harm your credit score in the early days. If you can demonstrate to the car leasing company that you can manage you can monthly payments. And, if you see it through, it will reflect on your credit score in a positive light.
Make sure you choose the right car
Remember that when you enter a lease agreement, you are going to be paying for depreciation, so by choosing a car that will hold its value over time means it will lower your overall lease payment. However, this does limit your choices, and all depends on your preference of vehicle.
Consider the lease term and mileage
You need think about whether the term of the lease is the right length for your requirements and whether it includes enough miles. Perhaps you normally drive 10,000 miles a year for work, but a close family member has just moved away then you need to factor the extra driving you will be doing during the lease agreement.
Think about the risks that are involved
You should never forget that leasing a car is basically a loan/rental so it’s extremely important that you follow the maintenance requirements on time because you might be charged a fee if you don’t. You also need to take caution when it comes to driving the car out and about because if it becomes damaged and it is proved to be your fault, then you will be charged for the damage.
The upfront cost of a lease is cheaper than if you buy
There are many drivers out there that much prefer leasing a car over buying one because the upfront costs are generally much cheaper. If you require a car quickly but don’t have the immediate cash for an initial down payment, then leasing one is a great option. However, bear in mind that you will need the money for the monthly payments, so it’s important to do the maths to determine whether you can afford the lease. It’s always a good idea to your research and compare the cost of buying a car versus leasing one to ensure that you are getting the best possible deal.
Leasing is a good option if you get bored quickly
If you get bored of cars and like to drive the most up to date models, then leasing is the best option for you. Most car leasing agreements last for 36 months, but it allows you to upgrade more often than if you were to buy a car outright. However, if you plan to keep a car for more than 36 months, then leasing probably isn’t the right option for you.