Can you lease a car if you have bad credit?

If you’re in the market for a car, you might be considering leasing instead of purchasing. But what if you don’t have good credit scores? Poor credit scores could make getting approved for a lease more difficult. And if you do qualify for a lease, low scores could affect your lease terms. Learn more about how leasing a car with bad credit works—and some tips that could help you improve your credit scores.

What you’ll learn:

• Leasing a car with bad credit could make it harder to qualify for the best terms.

• You might be charged higher upfront costs, interest rates and monthly payments if you have bad credit.

• Qualifying for a lease with bad credit may be easier if you have a co-signer or make a larger down payment.

• If you’re having trouble qualifying for a lease, you can consider alternatives, such as a lease transfer or improving your credit.

You don’t need a specific credit score to qualify for a lease. That’s because the minimum credit score needed to lease a car varies from dealership to dealership. According to Experian®, customers leasing new vehicles in 2024 had an average VantageScore® credit score of 751. And almost 17% of new car leases were to borrowers with credit scores from 580 to 659. 

That said, many dealerships look at industry-specific FICO® Auto Scores when considering auto financing applications. Unlike traditional credit scores, FICO Auto Scores range from 250 to 900 and give dealerships “a further-refined credit risk assessment” that’s specifically tailored to auto loans and leases.

Credit is important when you’re looking to lease. Your scores give the dealership an idea of how risky lending you a vehicle might be.

Generally speaking, the higher your credit scores, the less risky it is lending to you. That’s because good credit scores indicate you have a history of using credit responsibly and repaying your loans on time. Lower credit scores, on the other hand, could signal you’re a risky borrower. And that could make it harder to qualify for a lease.

Having bad credit could mean fewer vehicles are available to choose from. And if you qualify for a lease:

• The dealer might require a bigger security deposit or down payment.

• You may be charged a higher interest rate—sometimes referred to as the money factor or lease factor.

Here are a few options you can consider to improve your chances of qualifying for a car lease if you have bad credit:

• Put more money down. Lowering your loan amount with a large down payment may make you seem less risky to lenders.

• Trade in a vehicle. Trading in a vehicle with positive equity is like putting more money down.

• Use a co-signer. Having someone with a higher credit score co-sign your lease can increase your odds of approval or help you secure a lower interest rate.

• Opt for a less expensive car. Choosing a less expensive car might mean a lower lease payment, which may be easier to qualify for. You may also be able to find a dealership that leases used vehicles.

Improving your credit scores could make leasing a car easier. And the better your credit scores, the better your lease terms might be. Here are a few tips to consider from the Consumer Financial Protection Bureau (CFPB) that could help you improve your credit scores:

• Always pay your bills on time. Missed and late payments can negatively impact your credit scores. So try to pay on time, every time. You can even set up automatic payments or electronic reminders to help you stay on top of your payment due dates.

• Stay well below your credit limits. Your credit utilization ratio measures how much of your available credit you’re using. A high credit utilization ratio can hurt your credit scores. So take it from the CFPB: “Experts advise keeping your use of credit at no more than 30 percent of your total credit limit.”

• Pay your credit card balances in full. Paying your balances in full every billing cycle can ensure you stay well below your credit limits. It can also help you pay less in interest than if you carry over your balance month after month.

• Apply only for the credit you need. Too many credit applications over a short time could result in multiple hard inquiries on your credit reports. Hard inquiries could hurt your credit scores and signal to lenders that your financial situation has changed for the worse.

• Try to build a long credit history. “Credit scores are based on experience over time,” the CFPB explains. So the more experience you have with responsible credit use, the better.

Leasing a car with bad credit is possible. But the lower your credit scores, the trickier qualifying for a lease might be. Taking steps to improve your credit first could make qualifying for a lease or getting more favorable terms easier. 

As you build credit, you can monitor your progress with CreditWise from Capital One. It’s free and available to everyone—not just Capital One customers. And using it won’t hurt your scores. You can also visit AnnualCreditReport.com to get free copies of your credit reports.