Able to afford the monthly payments for a van, but worried you might be refused finance due to a poor credit rating?
Whether that's due to past financial issues or simply because you have no credit history, don't worry . . . there's little need to panic.
We'll be going over why your credit score matters for leasing and how van leasing with poor credit history is still an option.
How Does Van Leasing Work?
Van leasing (also known as van contract hire) is basically a long-term rental agreement where you pay an initial deposit and monthly instalments to hold onto a brand new van for a set period of time – usually 2 to 4 years, but it can be longer or shorter.
It's a cheaper, more accessible way of getting a new van than PCP-ing one, as the monthly payments on van lease deals usually work out cheaper.
And your purpose for the van doesn't really matter, as you can lease one for either business or personal use.
What Is the Eligibility For Van Leasing?
Leasing a van mainly comes down to your ability to make the monthly payments, as well as being able to pass a credit check during the application process.
And if you want a lease van for business use specifically, you'll need your company details such as company name, annual revenue, as well as information about the business bank account.
Why Do I Need a Credit Check to Lease a Van?
Because like other forms of vehicle finance, you're essentially borrowing a large sum of money in order to have full use of the van.
As such, lenders want to know that you're the sort of person who's reliable enough to pay it all back, and the best way of determining that is by peeking into your credit history. Well, a long hard look actually . . .
That's because your credit history shows any missed payments, what loans you've taken out, whether you're on the electoral roll, etc. Pretty much your whole financial/borrowing profile.
Where Can I Check My Credit Score?
There are a number of credit reference company websites that allow you to carry out a 'soft check' on your credit score for free.
A soft check means that your credit score won't suffer as part of the check (as opposed to a 'hard check'), because you're essentially only getting a sneak peek at the health of your score, rather than a full, detailed report.
Sites where you can check your credit score include:
What Credit Score Do I Need to Lease a Van?
It can vary depending on the individual leasing company, but you generally need a credit rating of at least 700 in order to pass the credit check and lease a van – or any vehicle for that matter.
Just be aware that a lot of companies have their own credit scoring scales and systems, meaning you might get different answers on what exactly your score is, and what exactly 'bad credit' consists of.
Nevertheless, below is a general overview of the scoring system and how each number range is graded. Anything below 'good' (700-749) and you're probably going to fail the credit check and not be accepted for a van lease.
300 - 599: (very bad credit score)
600 - 649: (poor credit score)
650 - 699: (fair credit score)
700 - 749: (good credit score)
750 - 799: (very good credit score)
800 - 850: (excellent credit score)
What Other Options Do I Have?
Joint lease agreement: This is where you'd apply for the van leasing deal with another person, meaning that both your incomes and credit scores are combined and considered together. If accepted, you'll both be responsible for the van lease monthly payments. The other person will usually need to live at the same address, and you should obviously pick somebody who has a good credit score.
Lease transfers: It's possible for you to take over a van lease from someone else if they 'transfer' it to you. You'll still have to undergo a credit check to do this, but it'll be less strict than if you were to take out an initial van lease yourself from the get-go.
Paying more upfront: Lenders will be more likely to consider someone with bad credit if you pay a larger upfront initial payment at the start of the contract (typically amounting to 9-12 months' worth of payments). It means that you've already paid off a chunk of the lease and are therefore less 'risky' to them.
Summary
Yes, bad credit van leasing is entirely possible. It could be a little harder to get accepted, but some lenders might take you on, and there's still less conventional options open to you like taking over a lease transfer or applying for a van lease with someone else.
FAQs
What is required to lease a van?
To take out a van lease, you need a full UK driving license and you need to complete a credit application in order for the finance company to check your credit rating.
What credit score do you need to lease a van?
Generally speaking, you need a fair to good credit history in order to lease a van, but there's no set score. Every finance company has their own specific criteria regarding who they're happy to lend to.
Can I get van finance with bad credit?
It's possible, but it'll be more difficult with bad credit, and you might have to take on a lease transfer or go for a joint lease agreement in order to increase your chances.