Can I Get a Car Lease With Bad Credit?

Auto Loan Balances at an All-Time High

Your heart is set on a shiny, new set of wheels but your credit is tanked. Don’t despair; you’re not the first driver to face this dilemma. Car leases do exist for those with bad credit and may even help you beef up your score.

Here’s why: Monthly payments can be much lower for leased cars, they often fall under the manufacturer’s warranty and tend to require less money down upfront. Not missing a payment on your lease may also help you amp up your credit, making you that more attractive to lenders down the road.

If all that sounds good to you, here’s how to get started.

1. Check Your Credit

Before you apply for any auto lease, you need to know where your credit stands. That way you’ll have an idea of what type of lease you may qualify for. It may also prevent you from overpaying, lest you think your credit is worse than it actually is. (You can view two of your credit scores for free, updated each month, on Credit.com to see where you stand.)

2. Shop Around

Now that you’ve got your number, it’s time to go shopping. But first, some dating advice: Don’t fling yourself at every slick dealer who feeds you a line — take your time to find the right one. Don’t be afraid to ask questions if something sounds off. Your credit may stink, but you shouldn’t settle for an unfair agreement.

Something to keep in mind: every time a lender pulls your credit report, that’ll create a hard inquiry on your file, which could ding your credit score. But the vast majority of credit scoring models are smart enough to know you’re shopping around and will group your hard inquiries from different dealers into just one inquiry if you complete your shopping in a specific timeframe, ideally two weeks.

3. Be Realistic

If your score is less than 720, you may encounter some difficulties. This could mean a higher monthly payment, a hard time getting approved or being asked for a security deposit or percentage of the car’s cost upfront. (Some dealerships require the latter, but you can always volunteer to put more money down if you want a smaller monthly payment.)

It’s also helpful to go into the process with realistic expectations. You don’t have a perfect credit score, so you don’t want to overextend yourself and get a super expensive car lease you’re unable to actually pay. Make sure you opt for something that you really can afford like a compact or mid-sized car instead of a luxury sedan, for example. The monthly payments will likely be lower, and there’s no reason to push your budget to the limit if you’re already dealing with financial issues.

4. Explore Other Options

Still coming up short? There are options. You can ask a trusted friend or family member to co-sign your lease. If you choose to go this route, you should both be aware that if you fall behind on payments and the account becomes delinquent, that will appear on your co-signer’s credit report. Only do this if you feel you can manage the lease responsibly.

Another option would be a lease takeover, which is still subject to approval from the original lender. This allows you to take over a lease contract from someone who can no longer make the required payments, and is often easier to qualify for.

More on Auto Loans:

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The Most Common Car Repairs You Have to Make

How to Read a Car-Repair Estimate

When your car’s check engine light flicks on, the first thing that pops into your head is probably “how much is this going to cost me?” But new data show that for newer cars about half the time the problem is often as simple as a loose gas cap.

That doesn’t mean you should ignore the warning light, however. Common check engine repairs can range from a $15 gas cap replacement to a $1,100 catalytic converter replacement and everything else in between. The most common repair across makes, models and years is oxygen sensor replacement, whose average cost is around $250, according to the annual CarMD.com Vehicle Health Index, released Tuesday.

Repair costs around the country remained just about flat over 2015, with a 1.5% increase in parts costs offset by a modest 4% reduction in labor costs, CarMD.com Corp. says. (The firm gets its data from car computer readings — i.e., OBD2 codes — submitted by repair facilities; for the 2015 study, CarMD examined 1,019,904 repairs.)

Overall, the average repair cost in 2015 was $387.31 ($155.15 in labor, $232.16 in parts). That’s 8% less than the 10-year high of $422 in 2006. One big takeaway from the data: If you have a new car and the check engine light goes on, check your gas cap.

“The most common reason the check engine light comes on in a brand-new model year 2016 vehicle is due to a minor loose gas cap problem, accounting for 46% of check engine incidents on new vehicles last year,” the report said.

Another lesson: Mother Nature has a lot to say about car repair costs. “Vehicle owners in the Northeast saw the largest drop in average repair costs, which were down 6.5% from $418 in 2014 to $391 in 2015 due in part to the mild El Niño weather pattern,” the report said.

That’s the good news. The bad news is perhaps self-evident: The average cost to repair 2006 cars was $399, double the average repair cost of 2016 models (whose repairs were usually covered by warranty). Worse still, the second-most common repair involved those pricey catalytic converters. Rounding out the top five were replacements for the “ignition coil and spark plug” ($390), gas cap replacements and checks and thermostat replacements ($210). New to the top 10 most common repairs were evaporative emissions purge control or solenoid replacements, which both cost just less than $200.

“One of the best ways to minimize cost of ownership and help reduce unforeseen car repairs is to follow a regular maintenance program and take care of small problems as soon as you’re aware of them, particularly as vehicles age,” said David Rich, CarMD’s technical director. A simple spark plug failure can snowball from a $50 part into a $400 repair, the firm said.

“Over the years, we have observed that climate and weather patterns has some impact on type and frequency of repairs,” Brocoff said. During 2013, when the Polar Vortex hit, car repair costs were up 6% across the U.S. and 9% in the hard-hit Midwest and Northeast. Battery, transmission and thermostat repairs shot up. Also, spark plugs were the fourth-most common reason for check engine light issues.

“This past 2015 calendar year, during which the U.S. experienced an El Niño weather pattern, spark plugs were only the eighth-most common reason for check engine light issues,” she said. “Battery replacements are not listed on the 10 most common repairs this year.”

Take a look at the top 10 car repairs of 2015:

  1. Replacing an oxygen sensor – $249
  2. Replacing a catalytic converter – $1,153
  3. Replacing ignition coil(s) and spark plug(s) – $390
  4. Tightening or replacing a fuel cap – $15
  5. Thermostat replacement – $210
  6. Replacing ignition coil(s) – $236
  7. Mass air flow sensor replacement – $382
  8. Replacing spark plug wire(s) and spark plug(s) – $331
  9. Replacing evaporative emissions (EVAP) purge control valve – $168
  10. Replacing evaporate emissions (EVAP) purging solenoid – $184

For those who lose sleep over repair bills, owning a car may not be the best option. But if you’re eyeing a lease, you still need to make sure your credit score is up in good shape, lest you get turned away. You can view your two free credit scores, updated monthly, on Credit.com.

More on Auto Loans:

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