If you want to drive the latest car model without owning it, leasing is one of the best ways to get one. If you have good credit, getting a car from traditional leasing companies is advisable. The leasing company approves a leasing deal after running a credit check. After signing the contract and paying a down payment, you can drive away with the car and make regular monthly payments. You can return the car to the company when the lease period ends or sign a purchase agreement.
Another option is to get a car through the lease-here pay-here car dealerships. Lease-here pay-here exists to give individuals with bad credit a chance to drive their dream car. So, if a conventional leasing company denies you a deal, always look for lease-here pay-here dealerships near me. However, you should be ready for the hefty prices demanded by some of these dealerships. This article explains everything you should know about lease-here pay-here dealerships to help you choose wisely.
What is a Lease Here Pay Here Dealership?
A lease-here pay-here is the kind of dealership that targets individuals who have been locked out of conventional car leasing companies because of bad credit. When a traditional finance company or bank declines to finance your car lease, a lease-here pay-here dealership is your last resort. However, like any other leasing option, a lease-here pay-here deal does not result in you owning the vehicle. Besides, you must pay higher monthly fees compared to conventional leasing companies.
How Lease Here Pay Here Dealerships Work?
If you are looking for pay-here, buy-here dealerships near me, don’t forget to check with companies that offer buy-here, pay-here deals. Often, these companies provide customers who wish to purchase or lease vehicles with bad credit great options. You can find in-house financing that doesn’t consider your credit score from buy-here, pay-here car dealerships.
The cars from lease-here, pay-here dealerships are not the newest you can find. Compared to franchise car dealerships, which have brand-new and certified pre-owned vehicles, lease-here, pay-here dealerships have older used cars. The process of striking a deal with a lease-here, pay-here dealership works as follows:
- Step 1: Check your credit score and if it is good enough, choose conventional car leasing. If your credit score isn’t good, approach a lease-here, pay-here dealership since it is likely to give you a deal despite your bad credit.
- Step 2: Assess your income and determine how much you can pay monthly. Remember that your monthly income level determines the car model and make you can lease. If you can only afford a small amount, you will get a smaller, older used car. Otherwise, you will get a more luxurious, newer car.
- Step 3: If the car dealership gives you different car options, start test driving to choose the right one. At this stage, you can negotiate with the car dealership for the best possible deal.
- Step 4: Ascertain that you can meet the demands for a down payment. While some dealerships may lease cars without requiring a down payment, others insist on it. If you can raise enough money for the down payment, it can significantly reduce the monthly payments.
- Step 5: Check the mileage limit attached to the car and if it is enough to fit into your driving habits. Remember, exceeding the mileage limit can result in penalties when you return the vehicle to the dealership.
- Step 6: Choose a dealership that can give you the best possible lease terms. You may consider whether the dealership offers low monthly payments, a low down payment, and minimal fees. Even though they welcome people with bad credit, lease-here, pay-here dealerships charge differently.
- Step 7: Once you reach an agreement with the leasing company, sign a lease specifying terms and conditions. Before appending your signature, please read the contract in its entirety to ensure it reflects everything you agreed on during the negotiations.
Benefits of Lease Here Pay Here Dealerships
Instead of purchasing a car, many people opt to lease one. Those who cannot qualify for conventional car leasing can enjoy the benefits of a lease-here, pay-here dealership. The following are the benefits of getting a car from a lease-here, pay-here dealership:
- Flexible Down Payment: With some dealerships, you will get a lease deal with little or no down payment. Regardless of the situation, you can opt to put down more money and enjoy lower monthly payments. Compared to the traditional car financing, a lease-here, pay-here dealership requires you to pay much less upfront.
- Low Monthly Payments: Leasing costs much less compared to purchasing a car. With car financing, you pay for the entire value of the vehicle. However, leasing allows you to pay only the depreciation value, which results in lower monthly payments.
- Access to New Technology: With a lease, you can easily and conveniently upgrade your car every few years. You don’t have to wait for years before you can purchase a replacement car. That makes it possible for you to keep up with the latest automotive technology, including safety, efficiency, entertainment, and connectivity features.
- Shorter Commitment: Lease terms are usually much faster than car financing deals. In most cases, the lease period doesn’t go beyond 36 months. That makes it more flexible than a long-term deal that ties you down to the same car for a long time.
- Lease-End Options: You can purchase the vehicle or return it to the leasing company when the lease ends. You may also swap the car for a new one or walk away. Nothing ties you down to a particular vehicle for longer than you should have it.
Drawbacks of Lease Here Pay Here Dealerships
While lease-here, pay-here dealerships avail car options to individuals with bad credit, they can be undesirable at times. Here are some drawbacks of leasing from these companies:
1) Expensive Payments
Leasing from a lease-here, pay-here dealership can be expensive. These leasing companies have high lease charges, almost like car loans. As a result, you end up paying hefty weekly or bi-weekly fees for an old, used car that isn’t worth the cost.
2) Older, Used Vehicles
It is difficult to qualify for a lease with conventional leasing companies with bad credit for newer car models. The only option you have is to approach a lease-here, pay-there dealership, which stocks older used cars. Therefore, you are unlikely to enjoy the benefits of the latest automotive technology.
3) More Frequent Payments
Conventional car leases demand that you make monthly payments to the end of the lease period. That might not be the case with the lease-here, pay-here option, which may require weekly or bi-weekly payments. If you default payment for any reason, the company can disable the car, rendering it virtually unusable.
4) Responsibility for Repairs
New cars have certain elements of repair and maintenance covered by the manufacturer’s warranty. Now that you are leasing an older car, the manufacturer’s warranty will likely have expired a long time ago. Therefore, maintaining or repairing is possible if you foot the bill yourself. With that, the cost of the lease is likely to rise higher than what you signed for in the agreement.
5) Control of the Vehicle
A lease-here, pay-here dealership owns the vehicle and controls it in several ways. For example, it has a tracking system installed to monitor your movements and any mileage violations. Therefore, you are always under the company’s radar, which can render you virtually incapable of exercising independence. Also, the leasing company can disable your car if you fail to make the weekly or bi-weekly payment. You cannot imagine the kind of embarrassment that can cause.
How to Improve Your Chances of a Lease Here Pay Here Lease Approval?
Like any other car leasing dealership, a lease-here, pay-here dealership has no obligation to grant you a deal. Before you apply for a lease, you can work on improving your chances of getting approval by doing the following:
1) Making a Substantial Down Payment
One way to convince a car dealership to grant you a lease is by putting down a substantial amount of money. A down payment or capitalized cost reduction is a great way of making up for your bad credit. If you can’t raise money for the down payment right away, take time to save before applying for the lease. Down payment lowers the amount of money you need to pay periodically and increases your chances of getting approval. However, it would help if you were mindful of the limit laid by the leasing company on the amount for the down payment.
2) Reduce Your Debt-To-Income Ratio
The debt-to-income ratio is a mathematical calculation in which your debt is divided by your income. A lower debt-to-income ratio is likely to get a more positive review from the leasing company. If you are not in a hurry to get a car, take time to work on that aspect of your finances. However, keep in mind the role of other factors in determining your chances of a lease approval.
3) Get Yourself a Co-Signor
If your credit is extremely bad, ask a family member to co-sign the contract for you. Not only does co-signing influence your chances of getting approval, but it also assures the leasing company of periodic payments. If you fail to pay for the lease, you will likely put your co-signor into trouble. Apart from asking them to pay for the lease, the leasing company will report the co-signor to credit reference bureaus, drastically affecting their credit.
Alternatives for Leasing with Bad Credit
Individuals with bad credit can still get a car leasing deal without going through a lease-here, pay-here dealership. Here are several alternatives for your consideration:
1) Lease Takeover
If you can’t get your car leasing deal, why don’t you consider taking over an existing one? This option allows you to take over what remains of someone else’s lease. Some leasing companies have mandatory lease checks to ascertain that you meet the other person’s credit standards. That’s to ensure that you can afford the resultant monthly payments.
2) Get a Co-Signor
Another way to a great car leasing deal is to ask a family member with good credit to co-sign the contract. The co-signer should be willing to assume responsibility for the lease when you default your periodic payments. Usually, a missed payment on a co-signed agreement hurts both your and the co-signers credit rating.
3) Purchase a Used Car
By purchasing a low-priced used car due to the vehicle’s depreciated value. That means that your monthly payments are significantly lower than when buying a brand-new vehicle. Besides, it is easier to qualify for a used car loan than to lease a car if you have bad credit. Approach a local car dealership with a special finance department for a deal.
Frequently Asked Questions (FAQ)
Can I lease a car with terrible credit?
Yes. You can lease a car with terrible credit. However, it would help if you had lease-here pay-here dealerships near me to get a deal. These leasing companies can grant you a car lease even with bad credit. Only that they mainly deal in old, used vehicles.
Can I take over a lease with bad credit?
Yes. You can take over a lease with bad credit. Once you agree with the current leaseholder, you can take over the remaining lease term. That means you take responsibility for the periodic lease payments. That type of arrangement makes it possible for you to get a lease approval with bad credit.
What happens if I fail to make payments on time?
If you fail to make payments on time, the leasing company treats you as a defaulter. While some companies start treating you as a defaulter immediately, others may take time to allow you to resume the payments.
If you find great “lease-here pay-here dealerships near me” you have no reason not to consider them as your pathway to a car lease. Their deals are great if you have bad credit but are expensive with high periodic payments, maintenance, and repair charges. That’s why you may want to explore all other available options before choosing this particular route. If you do not need a car now, work on strengthening your credit rating. You will get a good deal from a conventional leasing company offering newer cars when the right time comes.