CAR LEASING AND CREDIT SCORE: WHAT’S THAT ABOUT?
Since leasing is like renting, does your credit score even have to be that good?
We’re glad you asked! Actually, leasing is not like renting at all! That would be like comparing getting a hotel room to leasing an apartment – they serve different functions and they are processed in totally different ways. When you rent a car, you’re paying for the time you’re using that car for. When you’re leasing a car, you’re paying for the valueyou’re using it for. See the difference? Cool. So yeah, it’s essentially an elevated borrowing, which makes it more important for the leasing company (the entity that actually owns the car) to trust you with their property, making your credit score a much more important factor in leasing than buying/renting.
Well, what exactly is “good” credit? Aren’t these terms a little vague anyway?
Yes, extremely vague! It is what it is. Every company has a different credit requirement and that requirement is also broken down into different tiers. For example, if your credit score lies within 690-720+, then you qualify for Lexus’ Tier One, meaning that your interest rate would be lower relatively speaking, making your monthly payments lower. If your credit score falls within 670-689, then you qualify for Tier Two, which would be a bit more expensive.
What’s the deal with this whole co-signer business?
If your credit score is really that bad, leasing companies may deny you a lease altogether. In which case, having a co-signer with good credit could help you out. Co-signers only become responsible for the lease if the primary signer is late making payments or defaults on their lease. This could also help you build back your credit.
All in all…
Know your credit score, and keep it safe! It’s the best way for anyone to make sure they can trust you to borrow their stuff.
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