Can You Lease A Car With Bad Credit In Canada?
Do you have less-than-perfect credit and want to upgrade your vehicle? Luckily, there are ways you can drive away in the car of your dreams regardless of your credit score! Leasing a vehicle is a great option if you don’t think you can get financed – and it might be cheaper, too!
To help you get into a car as quickly as possible, we’ve compiled some advice on how to lease a vehicle.
Key Takeaways
- Leasing Is Still an Option: Even with a less-than-perfect credit score, leasing a new vehicle is achievable. By working with lenders or dealerships that specialize in bad credit situations, you can explore tailored options that fit your financial circumstances.
- Boost Approval Chances With a Cosigner: Having a cosigner with strong credit can significantly enhance your approval odds. A cosigner reassures lenders of your ability to make payments, opening doors to more favourable lease terms.
- Consider Making a Larger Down Payment: Offering a substantial down payment reduces the lender’s risk and can make you a more attractive candidate for leasing. It also lowers your monthly payments, making the lease more manageable.
- Rebuild Your Credit for Future Opportunities: Taking steps to improve your credit score, such as making timely payments and reducing existing debts, can expand your leasing options and secure better terms in the future.
- Explore Alternatives Like Lease Takeovers: Assuming an existing lease is a practical option for those with bad credit. Lease takeovers often come with less stringent credit requirements and allow you to drive a newer vehicle without the full financial commitment of a new lease.
What Credit Score Is Required To Lease A Car In Canada?
Leasing a car in Canada typically requires a credit score of 600 or higher, as most lenders view this as the threshold for reliable borrowers. However, having a lower score doesn’t automatically disqualify you. Many dealerships and lenders offer flexible options for individuals with bad credit, focusing on factors beyond the score, such as income stability and payment history. If your credit score falls below 600, you may face higher interest rates or the need for a larger down payment, but alternatives like in-house financing or cosigners can make leasing achievable.
How to lease a new car with a low credit score?
Canada doesn’t require a minimum credit score for leasing. However, sometimes dealerships still take it into account when deciding whether or not to lease out a vehicle – although you don’t have to worry about that at Birchwood Credit! Our lease application process goes beyond your credit history to see the bigger picture. In fact, leasing can actually improve your credit score and make it easier for you to upgrade to your dream car later on. A win-win scenario.
Another great thing about leasing is that you can switch up your vehicle regularly. Want a different colour? Leather interior instead of cloth? You can choose something else when your lease runs out! A lease can last for up to five years, so you won’t get tired of driving the same car for decades to come. Leasing is also a good option if you don’t want to worry about trade-in costs and warranties running out – all of that is taken care of.
Leasing Vs. Financing With Bad Credit
Choosing between leasing and financing with bad credit depends on your financial goals, payment flexibility, and long-term needs.
Pros Of Leasing
Leasing with bad credit offers lower monthly payments compared to financing, making it a more budget-friendly option. It also allows you to drive a newer vehicle with the latest features and warranties, often with minimal upfront costs. Additionally, leasing provides flexibility to upgrade to a new model at the end of the lease term without the long-term commitment of ownership.
Cons Of Leasing
Leasing with bad credit can come with higher interest rates and stricter terms, such as mileage limits and additional fees for excess wear and tear. Unlike financing, leasing doesn’t build equity in the vehicle, meaning you won’t own it at the end of the lease. Additionally, early termination of a lease can result in costly penalties, making it less flexible if your financial situation changes.
Leasing A Car With Bad Credit
Leasing a car with bad credit is possible, but it often requires careful planning and consideration of your options. Lenders may impose higher interest rates and stricter terms to offset the perceived risk, but strategies like offering a larger down payment, having a cosigner, or choosing a lease takeover can improve your chances. Specialized dealerships, such as those offering in-house financing, focus on assisting individuals with bad credit by providing tailored solutions to help you secure a lease. By taking steps to improve your credit and exploring flexible alternatives, leasing a car can be a manageable and realistic option.
Taking Over A Lease With Bad Credit
Taking over a lease, also known as a lease transfer, is an excellent option for individuals with bad credit. This approach involves assuming the remaining term of an existing lease, often with fewer credit restrictions than starting a new lease. Since the original lessee has already fulfilled the initial requirements, lenders may view the transfer as a lower-risk arrangement. Lease takeovers can also save money by eliminating upfront costs like down payments, making them an affordable and practical solution for getting behind the wheel of a vehicle without the long-term commitment of a new lease.
Finding A Lender
Finding the right lender is crucial when leasing with bad credit. Look for dealerships or financial institutions that specialize in working with individuals in similar situations. In-house financing options often provide more flexibility, as these lenders assess your overall financial picture rather than focusing solely on your credit score. Researching and comparing lenders can help you secure the best terms and improve your chances of approval.
Leasing A Car In A Consumer Proposal
Leasing a car while in a consumer proposal is challenging but not impossible. Many lenders view this as a high-risk situation, but some specialize in helping individuals rebuild their credit during financial recovery. Be prepared to provide proof of stable income and consider a cosigner or larger down payment to strengthen your application. Exploring flexible lenders, such as those offering in-house financing, can make leasing a car during a consumer proposal a viable option.
Tips to better your car application with a low credit score
Make a down payment
Every little bit counts. Whether it’s $250 or $1000 dollars, putting down some money on your next vehicle will make the application process easier for you. It essentially tells the dealership that you’re committed to them and that you’re serious about leasing the vehicle. It also lowers the total lease amount, which leaves you with more money every month to do the things you love.
Buy from a trusted dealer:
It’s easy to go to the first dealership that pops up on Google when you search “Lease Car Winnipeg,” but how do you know who to trust with your money? Try and find a dealer that will help you see the bigger picture when it comes to your credit. That way, you’ll know they genuinely want you to drive away in a car you love and aren’t just looking at the number on your credit report.
Co-signer
Do you have a friend or family member that has a high credit score? Consider asking them to co-sign your application. It’s not absolutely necessary, but it helps if you want the application process to be quick and easy.
Lease Swap
Sometimes life gets in the way and people aren’t able to make it to the end of their lease agreements. No worries, though – that’s where you come in! Lease swaps, or lease transfers, are handy because you’ll only be responsible for the remaining payments on the other person’s lease. This is a great option for someone with less-than-perfect credit who still wants to drive a car that’s been used for less than a year.
Leasing a car in Winnipeg, Manitoba
Looking for a car to lease in Manitoba? Birchwood Credit offers car loans and leases to all credit types. Our team can help you find a new or used car lease that fits your budget and helps you rebuild your credit over time. Still have questions? Check our article on the 5 advantages of leasing a car.
Ready to get started? Contact our team today!
