Used-car leases are rare and can be just as difficult for bad credit. Some automakers and dealers offer lease programs for used cars, especially among certified pre-owned vehicles.
“There was a period of time when some of the [automaker finance units] had decent used-car programs,” Sin said, but those days have passed. “There isn’t the same sort of savings as before, and they have the same sort of credit requirements.”
And while a used-car price would be lower, the required fees at the beginning and end of a lease will be just as high. Plus, the money factor — the interest rate on the lease — will likely be higher for the used vehicle, as it is for loans on used cars. Other drawbacks might be various limits on the models, mileage and age of used cars that a lender allows you to lease. Finally, leasing a car whose warranty has expired could leave you on the hook for repairs.
Another way to get a used car — a lease transfer (taking over someone else’s lease) — may not be a back door into a better lease deal. A low credit rating can still be a problem.
“Lending companies use the same sort of criteria for lease transfers, unfortunately,” Sin notes.
If the main reason you’re looking at leasing is to get a lower monthly payment on a car you otherwise couldn’t afford, a better idea might be to shop for a cheaper new or used vehicle that you could buy on the payment you can afford.
“If you are a poor credit risk, you should probably focus on rebuilding your credit,” Reed said, suggesting the best way to do this is to take out an auto loan and pay it off on time. “After a year of making on-time payments, you can think about refinancing at a lower interest rate” for a still lower payment.
At the end of the loan, you’ll own a vehicle that you could use as a down payment on something new. Your improved credit also will help put a lease deal, or a better loan, on the table next time.
