Car leasing with bad credit showing on your credit report(s), can be a major problem when trying to purchase a car. People experience severely frustrating situations while looking out lease arrangements, especially when lenders have tightened their criteria, and are only lending to those with the very best credit rating.
Those with a poor credit history are not even considered by some banks, as they have had bad experiences dealing with such borrowers in the past; consequently, profiling everyone with any adverse information, as high-risk customers. Such issues continue to be the case, but some car dealers and manufacturers are so desperate to gain an advantage over their competition, that they are ready to help you out, even if you have had credit problems. This means you still have a good chance to lease a new car – even with bad credit!
The subprime credit customers or those with lower than normal credit scores, need to ensure that their file is accurate to avoid paying higher interest rates or making bigger security deposits when leasing – go to http://www.howtodeletedebt.com/shortcuts to see how to check the accuracy of your credit reports.
What is non-status car leasing? It falls into three categories as stated below:
– Adverse credit
– Previous problems with car finance
– Bad credit debts in the last six years
All these categories amount to the same thing. Whoever has had issues with credit in the past, will find it difficult to buy a car on a lease contract, if they continue to approach mainstream lenders. This does not mean you do not have a solution, because (thankfully) there are still lenders who operate in riskier markets, as they believe the greater profits outweigh the increased risk.
Falling under the criteria of non-status (based on any of the three aforementioned categories) causes hesitation on the part of normal lenders, and would be where your application ends. Speak to an advisor who specializes in non-status applicants, since they have seen the whole process (inside & out) and can discuss issues in detail. They will design an action plan for you to get into a contract with one of their finance companies, and may even direct you to howtodeletedebt.com/techniques/methods to understand credit repair (and how it can facilitate the application process).
How does car leasing with bad credit work?
Many car dealership companies will have leasing operations that are intended, not only for people with good credit, but also for those with bad credit scores. They recognize, of course, that the latter were affected by the recent economic downturns.
Instead of wasting time applying for car loans, with poor chances of getting approved, vehicle leasing firms offer people (with bad credit) vehicles leasing, and hire contract services that are mutually beneficial. For lessees, they benefit from the following:
• Minimal down payment
• Lower monthly payments
• Quick processing
• A new car, after the end of each contract
Down payment on car lease contracts are minimal. Some companies that deal only with leasing services, just demand advance lease payment – which could make a lot of difference on the lessee’s finances.
Monthly payments on a leased car are usually lower than car loan payments – although one can significantly reduce the amount of vehicle loan monthly payments by putting up a hefty amount for down payment. Industry indicators report that the difference between car loans payments and lease monthly payments are somewhere between 35% to 40% (with lease payments having the advantage).
For people with bad credit, the application process (for car leasing) is quicker than car loan application process (for those with bad credit). In too many cases, the loan officer has been known to skim over the application and toss it in the ‘disapproved’ tray. Use http://www.howtodeletedebt.com/techniques/tips to thwart this malicious outcome, by learning how to dramatically improve your credit score, to (at least) stand a better chance avoiding the ‘disapprove’ tray.
There are certain disadvantages to car leasing transactions, however:
• Penalties for violations
• Lack of control
The car leasing company naturally will have rules. For example, there is usually a mileage limit. Once that limit is breached, a fee is charged. There is also a penalty for early termination or if the auto is damaged and the lessee is forced to terminate the contract.
Since the contract is for a lease, the leasing company does not relinquish control of the car. Leased cars are monitored 24/7, through a GPS systems, which are also used to remind the lessee of the payments or to disable the car (in case the lessee is unable to pay).
The plans are reasonable enough to consider – even a self-employed person with no credit history can consider the leasing deal – all they need to do is present proof of steady income.
Applying for car loans with bad credit is difficult, but there is another way people with bad credit can still avail themselves to the conveniences of having a car, to use for everyday activities – and it can be done through contract car leasing or bad credit car leasing plans, offered by the leasing companies.