Car leasing with bad credit

Affordable payments despite past problems: car leasing with bad credit

BuyaCar team
May 30, 2018

Car leasing is one of the cheapest ways of getting a new car. It’s a long-term rental agreement, with fixed monthly instalments. Leases tend to last for two to four years and just like your holiday hire car, you return it at the end.

The low repayments on offer mean that you’ll usually require a strong credit rating to be accepted for a lease, as lenders are looking for the least risk.

If you have a poor credit rating, but can afford the repayments, then a lease-type arrangement isn’t out of the question: you’ll just need to look at another type of car finance.


Leasing a car with PCP finance

Personal Contract Purchase (PCP) finance is a similar arrangement to leasing, but it's available for used cars as well as new models. Your repayments only cover part of the car's cost, so they are relatively cheap. At the end, you can hand the car back and walk away.

What makes it different is the flexibility that’s offered: at the end of the agreement, you also have the option of buying the car for a set fee, which can be done by refinancing. If the car is with more than the set fee, then you’ll be able to trade it in and use the difference towards a deposit on another model.


Leasing repayments with bad credit

You’re more likely to be accepted for a PCP agreement than leasing if you have a low credit score because PCP is a full finance agreement where interest is charged, allowing lenders to adjust for their risks. 

As a result, rates will be higher if you have a low credit profile and you’ll normally be required to pay a deposit. This isn’t a bad thing if you have the money: the bigger the deposit, the lower your monthly repayments, including interest charges.


Affordable PCP arrangements

Your PCP repayments are based on the amount of value that your car is expected to lose during the agreement. So if you buy a car that holds its value well, then this will reduce your repayments.

The example monthly prices shown on BuyaCar are representative examples, based on a typical interest rate; if you’re borrowing with poor credit, then the cost is likely to be a little higher.

You’ll find more details about the used value of different models in our buying guides.


Leasing a used car with bad credit

Most leasing arrangements are restricted to new cars, but PCP finance is available for both new and used vehicles that are less than four years old.

This provides far more options with more cars in a wider price range. Older models are available too, but you’ll normally need to spread the cost with Hire Purchase (HP) finance, which will result in you owning the vehicle.


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