Determine if Auto Leasing is Right For You – Part 2
In the previous post, we talked about the factors that you need to consider if you are planning to lease a new car. After considering your monthly income, it is now time to talk about other factors that will help you determine if leasing is right for you.
Category 2: Your Credit Score
Car leasing companies will require you to have a credit score of at least 640 in order to lease a car. Those who have bad credit can rejoice in the fact that there are leasing companies that specialize on bad credit auto leases.
Your credit score is not just a set of numbers printed on a piece of paper. It measures your capability to pay debt, along with determining your spending habits.
If you have a low score (FICO of 500 to 600), you should take the time to analyze the situation and do something that will help improve your credit. Obtain your credit report from the top credit bureaus and inspect each entry on the report. If you find any errors, you should report this right away.
The Importance of Your Credit Score
Your credit score will help lenders and leasing companies determine the money factor in your car lease. The money factor (or the interest rate of the lease) is where lenders earn money. Since auto leasing is similar to financing a car, lenders need to charge a certain amount of interest to compensate for the risk involved in leasing.
Take comfort in the fact that your credit score alone will not give you a cheap car lease. Leasing is based on the MSRP and the residual value of the car. If you decide to lease a cheaper car with a high residual value, you can expect to pay less in your car lease.
Having a good credit score will also make it easier for you to get approved for the car lease. This is because car dealers consider you as 'less risky’ compared to people with a low credit score.
We will discuss more about auto leasing in the next post. In the meantime, you can check out the latest car lease deals in the market with a simple online lease quote. It does not matter if you have good or bad credit. Our free online lease quote will help you find the best car lease in an easy and hassle free way!