How to Lease a Car With No Creditby Brandon M. Dennis
One of the most common reasons that people lease a car is because they have poor credit or no credit and are drawn in by dealerships that promise great rates that cater to these demographics. While these companies do lease cars to people with no credit, they will often want you to show proof of reliable income and will usually charge you higher rates.
Show Your Work History
Although the leasing company or car dealership you apply with may ask for additional information, such as proof of residence, it will almost always want to see your work history so that it has verifiable proof of your income status on record before leasing a car to you. Before you attempt to lease a car, gather two or three of your most recent W-2 forms or pay stubs together and at least one recent tax return to prove that you earn as much money as you claim you do.
Do not lie about your income, as you will most likely be disqualified for a lease and you may be held accountable via legal actions.
Pay a Higher Down Payment
Once you can prove your income and actually qualify for a new lease agreement, you will most likely be asked to pay a higher down-payment than you would normally be required to pay if you had better credit. This higher down payment will secure your lease agreement and protect both you and the leasing agency by ensuring that if you fall behind on your monthly payments, you won’t immediately lose your vehicle to repossession.
Pay a Higher Interest Rate
Some leasing agencies don’t require you to pay a down payment, even if you have no credit. If they don’t, you’ll be required to pay a higher interest rate over the course of your lease agreement, which could result in high monthly payments. If the lease agreement requires that you pay $10,000 over a five-year period -- 60 months -- for example, your monthly payments would be $166, not including any taxes or other fees. With a 4-percent interest rate, you would only have to pay an additional $6 per month. With a 14-percent interest rate, however, you would have to pay an additional $23 per month. While that additional amount might go unnoticed, these figures could be much higher if you lease a more expensive vehicle. Cars.com provides a useful calculator for figuring out how much your monthly payments would be based on a number of factors.
Qualify for Discount Programs
One way that you can lower your monthly payments is to lease a “green” vehicle, such as a car that can run on a mixture of gasoline and biofuel or one that uses an electric motor. The Department of Transportation offers many discounts to people through both state and federal rebate programs in which you can get more money back on your annual tax return or receive an immediate discount on your lease agreement if you lease an economical car.