Financing options for a car lease with bad credit?

nhlbluesgirl · ‎02-02-2016

Hello! I just joined today and have already learned quite a bit by just reading this forum. I was hoping you guys could point me in the right direction. I'm looking to lease a car and my credit isn't that great. TransUnion score 586 (Auto adj 560). I have a chapter 13 on my credit (discharged March 2014) and a few small collections and a few late payments (post discharge), and student loans. Suprisingly, I got preapproval from Capital One with an average of 14% APR (depending on the car). However, I didn't see any option on their site for leasing a car. Can anyone head me in the right direction towards company that will possibly approve me for a lease, instead of a purchase?

FICO 8 as of 1/8/2022:

Pway · ‎02-03-2016

@nhlbluesgirl wrote:
Hello! I just joined today and have already learned quite a bit by just reading this forum. I was hoping you guys could point me in the right direction. I'm looking to lease a car and my credit isn't that great. TransUnion score 586 (Auto adj 560). I have a chapter 13 on my credit (discharged March 2014) and a few small collections and a few late payments (post discharge), and student loans. Suprisingly, I got preapproval from Capital One with an average of 14% APR (depending on the car). However, I didn't see any option on their site for leasing a car. Can anyone head me in the right direction towards company that will possibly approve me for a lease, instead of a purchase?

Leasing will be tough. I tried about 6 months post bk and it was a no go. Although I could of financed the car without a problem. This was through GM, I wanted a Chevy Cruze. I just don't see it at this present moment of you leasing a car with such low scores. Capital One does not lease cars.

Thank you for the wealth of knowledge I have learned from these forums. I am logging off as of November 9, 2022. I wish everyone great success.

Anonymous · ‎02-03-2016

Welcome to the forum. I hate to be this blunt but leasing is going to be difficult based on what you posted. You have to give it at least a year or more to even consider leasing. Is leasing your only option? Why not finance for a while and then once your profile improves, you can go the lease route?

This is definately up to you of course...

settleordelete · ‎02-03-2016

What brand of vehicle you were looking to lease?

I've been where you are trying to go and I don't wanna go back.

StartingOver10 · ‎02-04-2016

@nhlbluesgirl wrote:
Hello! I just joined today and have already learned quite a bit by just reading this forum. I was hoping you guys could point me in the right direction. I'm looking to lease a car and my credit isn't that great. TransUnion score 586 (Auto adj 560). I have a chapter 13 on my credit (discharged March 2014) and a few small collections and a few late payments (post discharge), and student loans. Suprisingly, I got preapproval from Capital One with an average of 14% APR (depending on the car). However, I didn't see any option on their site for leasing a car. Can anyone head me in the right direction towards company that will possibly approve me for a lease, instead of a purchase?

It is very difficult to get financing when you have late payments and collections post discharge. Are those collections from before the Bk or after? If before, use your discharge to get the collections removed. Some CA's put the collection on your account knowing that it is a violation of the discharge injuction thinking it will pressure you into paying more. OTOH, if these collections are post discharge, then there is a different issue at work here: a budget issue.

If I were in your shoes I would do the following:

Put together a HH budget
Forget about leasing a vehicle for now
Forget about financing a vehicle for now
Use your tax money to get a cash vehicle if you need one
GW the late payments off of your CR - this can take a while. Visit the rebuilding your credit forum for ideas on GW letters
Get rid of the collections - either by suing the CA if they are from debt that is pre-discharge or PFD if they were from debt post discharge

A vehicle is a sizeable expense. Adding an expense when you are struggling to make your other obligations will keep you in bad credit territory. Get the cash vehicle until you are better situated with your finances. GL

Anonymous · ‎02-04-2016

I agree with Starting over. You will probably be best served by cleaning up what you can in your credit. I doubt you could get a lease right now. If you have to get a car right now make sure you only buy what you need and be disciplined about rebuilding so you can refinance to a decent APR in 6 months or so. If you can hold off and work through some of these issues you will find you have many more options than you do now.

A note on leasing, they can be really complicated because the transaction is not as transparent as a purchase. Good leases are really geared towards folks with good or superior credit because the default risk is low. With low credit scores the money factor (APR) will likely be too high to make a lease make sense and once you sign you can't refinance once your credit improves. For that reason I would suggest doing a purchase while your rebuilding. In a few years your scores will be solid and you will be able to get a good lease deal.

nhlbluesgirl · ‎02-15-2016

Thank you everyone for your suggestions. Unfortunately I couldn't put off getting a new vehicle because my current one was needing more money put into it than it was worth. To answer an above question, yes the collections were post discharge. It was shortly post discharge, and I stupidly had the idea that my credit was ruined because of the bankruptcy, so I didn't worry about it. I have since then changed my way of thinking and am doing better now.

I was able to get approved for a lease, but the payments would have been too high. So, I ended up getting a used car and got approved through Cap. One with a 10.4% interest rate. I think it helped that I put down a 25% down payment. I'm hoping that making on time payments will help improve my score, so I can refinance. Any idea on how long it will take to improve, if I always pay on time?

FICO 8 as of 1/8/2022:

Anonymous · ‎02-15-2016

Congrats on the car. I think this was a smart way to go, you already have equity in this car because of the down payment so that puts you ahead of the game. My guess is you will be able to refi in 6 months. Just be smart about use of credit and pay everything on time and you'll be fine. I would join a credit union now to build a relationship so when you are ready to refi you have a great source for a decent apr.

Best of luck, keep using the myfico community for advice and you'll be great