Most leasing companies conduct credit checks on all individuals and businesses wishing to lease a car. If your business has an impressive credit rating, that isn’t a big issue, as you can still get approval for a car lease at a lower interest rate. However, businesses with poor credit ratings are not so lucky since their lease application can either be denied or exorbitant interest rates. If your company has poor credit, you can still lease a car or a fleet of cars to meet your needs. In that case, you can get a business car lease with no credit check from a specialist funder near you.
What Is a Business Car Lease?
A business car lease is a contractual arrangement in which a company gets vehicles to use in its daily operations for small monthly payments. The lease lasts for a given duration, usually three years, after which the business returns the car to the dealership. The leased vehicles are available by the company’s employees and may also serve business purposes. For example, lease trucks are great when it comes to transporting goods.
The business may have to make a down payment during the deal signing. After that, it will make monthly payments for one to five years, depending on the stated lease period. Luckily, a business lease is less costly than a personal lease.
Vehicles on commercial leases usually come with higher mileage limits than those leased for personal use. That’s because it is expected of companies to drive their vehicles more frequently for business purposes. Therefore, it is not uncommon to find car dealerships offering up to 40,000 miles per year. If you use the vehicle beyond the recommended mileage, your business may have to pay for excess mileage. Additionally, the dealership may require you to pay for any damage you might have caused.
How to Lease a Business Car with Bad Credit?
Even with bad credit, a business can still lease a car, albeit with some difficulty. That means taking time to research the market, shop intelligently, and understand the effect of your current business rating. Here are some tips to help you easily qualify for a business car lease with bad credit:
Find Out Your Busines Credit Rating
Even though you want a business car lease with no credit check, it helps to get a printout of your official credit score. Your credit reflects your standing at any time, while the credit report is a summary as a borrower and reliable debtor. While checking your credit score is a good thing, doing it too frequently can negatively affect your credit score. Some car leasing companies may require you to bring a credit report. Credit scores range from 300 to 850, and a score under 620 is considered subprime. A credit score of 700 is good enough for a company to lease a car. If your credit is below 620, do not despair. You can still qualify for a business car lease.
Expect a Cheaper Vehicle
Now that you have poor credit don’t expect to get approval for a new, top-of-the-range car. The leasing company can allow you to drive away a cheaper, older car model in most cases. But that’s only possible if the leasing company handles both weak and strong credit applicants.
Target a Vehicle the Dealership Cannot Wait to Lease
Possibly, you will struggle to find a car or truck to lease when you have poor credit. To increase your chances of getting a vehicle, you should carry out an extensive search. Most vehicle dealerships lease out newly-released vehicle models at the end of the year. Thus, they can be eager to lease out outdated car models that could be taking a lot of parking space in their lots. An easy way to unload such vehicles is to lease them away to customers who come asking for them. That’s your chance to get any vehicle you want without a good credit rating.
Verify Your Income
Now that you have bad credit, the only way to redeem your chances of getting a business car lease is to show you have adequate income to cover the monthly payments. It doesn’t matter how low your credit rating is. After the car dealership ascertains that you have a steady monthly income, it will grant you the lease. Ideally, your income should be enough to cover your expenses and debt repayment. Also, it would help if you showed how hard you are working to improve your credit score. If you’ve had a car lease before, show proof that you have an excellent payment history.
Save to Raise a Bigger Down Payment
Your ability to raise a substantial down payment could be all you need to convince a car dealership to grant you a lease. So, it would help if you took the time to save money to raise enough money to make the down payment. Not only will that qualify you for a lease, but it will also allow you to get a reasonable car. You cannot afford the luxury of making any down payment like is the case with businesses with good credit.
Benefits of Business Car Leasing
Business car leasing is beneficial in many ways. First, it makes it easier to improve the business cash flow. It also saves time and can result in tax benefits. Here are the benefits of business car leasing that are worth considering:
1. Improving Business Cash Flow
Business car leasing is one of the best ways to improve your cash flow. It makes it possible to avoid tying up cash in a depreciating asset such as an owned car. Also, you can avoid spending a large amount of money on a new car. Leasing frees your money from getting tied down in a depreciating asset. Furthermore, the monthly payments can be much lower, especially if you enter into a lease-to-own deal.
Once you have freed up enough funds, you can easily continue with your everyday operations. A lease also allows you to choose how much you wish to make and down payment. Paying a large initial amount usually results in more affordable monthly payments, which can improve your cash flow in the long run. So, if you are looking for a way to free up cash in your business, consider leasing a car.
2. Saving Time
Did you know that you can save time simply by leasing a vehicle? Most car dealerships do not even require you to visit their premises to rent a vehicle. All you have to do is call the dealership, and it will do all the hard work for you. However, issues may arise if your business has bad credit. In that case, you will have to visit the dealership to check out the available options.
Besides, business car leasing helps you save the time it would have taken for you to search for a suitable company vehicle. Since the deal can last for years, it will be a long time before you require to hire another vehicle.
3. Improving Safety Standards
When a business cannot afford a new car, it may resort to a used one. While a used car costs less, it might not come with all the safety features that make life good for your staff members. Since most dealerships lease new cars, your staff can enjoy advanced safety features. Besides that, news cars come with a warranty covering all repairs and maintenance during the lease period. Therefore, having such a vehicle in your company can give you peace of mind.
4. Gaining a Competitive Edge
A business car lease makes it possible to stay competitive for a long time. When the lease duration ends, you can ask the dealership for a newer model. Your company’s image is bound to improve even in the eyes of those who have no idea if the car is leased. On the contrary, buying a car on loan means you get stuck with it for a lifetime with no option for an upgrade.
5. Paying Less for High-End Vehicles
Did you know that business car leases get cheaper with high-end vehicles? Thus, the most competitive car makes and models cost less to rent than their cheaper counterparts. Besides, you have the option to buy the car when the lease expires. Therefore a business car lease makes it possible for you to enjoy high-end vehicles at a lower cost.
How to Improve Your Business Credit Score?
Even as you struggle to look for a business car lease with no credit check, it would be great if you worked at improving your credit score. Here are some suggestions on how you can do that:
1. Obtain Your Business Credit Report
The first step towards improving your credit score is to get a credit report. That ensures that you know what you are improving on. You can contact credit reference bureaus such as Experian, Equifax, or TransUnion for a free credit report, usually issued once a year. Check through the report to ascertain that it contains accurate information. If not, you can lodge a complaint to the credit bureaus for a correction.
2. Obtain a Business Credit Card
If your business credit card allows you to get one, why not? Go ahead and acquire a business credit card. Frequently using a credit card can help you improve your credit rating if you pay off any pending balance at the end of the month. Since credit cards come with introductory rates, it is important to go for an affordable one. The best are those with a 0% introductory rate.
3. Pay Your Bills on Time
One of the biggest contributors to a poor credit rating for your business is how you pay your bills. Whenever you delay payment, credit reference bureaus take note and reduce your credit score. Therefore, make sure you pay your business deals promptly. Where you can, use direct debit to make timely bill payments. You will not only avoid falling back on your payments but also improve your credit score.
4. Reduce Applications for Credit
Did you know that every loan application (no matter how small) you make affects your credit score? That’s why you should avoid making too many credit applications until your business credit score improves.
5. Avoid Overstretching Bank Overdrafts
Sometimes it is hard for businesses to operate without overdraft facilities. If you can avoid it, don’t go for any overdraft. Also, if you have a dormant business account, close it. These simple measures can help your business improve its credit score and qualify for a car lease.
Frequently Asked Questions (FAQ)
What if my lease application is declined?
A business with bad credit is likely to have its lease application turned down for various reasons, including the inability to make monthly payments. Some companies may decline to grant you a lease but provide you with several options to improve your chances of qualifying for one. One of them is taking time to improve your credit.
Can my business lease a car with bad credit?
Yes. Your business can lease a car with bad credit, especially from a dealership that doesn’t believe in credit checks or one with second-hand cars. It helps to open up to the dealership about your finances.
Do you need business credit to lease a car?
Sometimes, your business credit could be too awful to allow you to qualify for a lease. Any dealership would deny you the opportunity to lease a car because of that. Therefore, you should consider guaranteeing the lease, especially if you have good credit. The dealership would have no problem leasing the vehicle to your business because you guaranteed monthly payments.
Getting a business car lease can be difficult, especially if you have bad credit. To avoid that, the easiest option is to consider a business car lease with no credit check. However, that isn’t as easy as you might think, given that it results in a high down payment, higher monthly payments, and denial of access to newer cars. If you work on improving your business credit, it couldn’t be long before you can lease a better car more cheaply.