Do you need a car to drive but can't get approved for a regular loan because of bad credit? If yes, you are not alone. Many people suffer from a poor credit score through no fault of their own but because they have been victims of circumstances. For instance, your company may have been forced to shut down or lay-off some employees because of the recent economic slump.
If it will take some time for you to completely repair your bad credit and waiting is not an option, you may consider applying for a bad credit car loan or a bad credit car lease. On this post, we will focus on the advantages and disadvantages car leasing. At the end of this article, you will have a much better understanding about the pros and cons of leasing.
Advantages of a Bad Credit Car Lease
Lower monthly payments . Lease payments are much lower compared to monthly loan payments. It's very important to consider your financial condition before making a decision. You can either lease a car or acquire a car loan, depending on how much you can afford.
Minimal upfront payment . Loans for bad credit are usually accompanied with expensive interest rates. When you purchase a car, submitting a higher down payment is one way you can lower your loan rate. If you can make up to 20% down payment, you can ask your lender to reduce your rate. On the other hand, some leasing companies only require an advanced lease payment which can make a big difference in your finances.
Drive a new car after each term. When your lease term ends, you can simply return the car or renew your lease contract with the same leasing company and request for a different car. You can choose to drive a car with the latest features without spending as much.
Quick and easy application process. It is technically much easier to get approved for a bad credit car lease than a car loan. Most leasing companies only require proof of a steady income to ensure that you are capable of the monthly lease payments.
Disa dvantages of a Bad Credit Car Lease
Penalty fees for violations . Car leasing companies have a list of rules that you should comply with while the car is in your hands. Failing to comply with these rules would mean paying the penalty charges. For instance, there is usually a cap or limit on the mileage you can drive each year. If you exceed, you will pay a fee per exceeding mile.
Early termination penalty . In case you want to get out of your lease early, you will pay a fee. In case you get into an accident and you are forced to terminate the lease, you will still be accountable to pay the penalty.
Lack of control . Since the car is still owned by the leasing company, you are not allowed to make modifications. As a lessee, you must strictly abide by the terms and conditions of your car leasing company.