Like with PCP finance, a car lease deal is essentially a loan whereby you borrow the total cost of the rental payments, paying them back in regular monthly instalments. Because of that, lenders are going to be very interested in your finances and financial history in order to assess your likelihood of meeting the monthly payments for a vehicle, whether you intend to use it for personal or business use.
That assessment will take place via a credit check, as required by Financial Conduct Authority (FCA) regulations. A creditor is not legally obliged to tell you that such a check is taking place, though you may still receive a quick heads-up.
So if you want to learn how to play your credit score safe and secure a lease deal on a new vehicle, please do read on!
Do you get credit checked for car leasing?
Yes, a credit check is necessary for a car lease deal. This isn't deemed a 'hard' check, so it won't affect your credit score.
Do you need a good credit score for a car lease?
Although it is possible to lease a car with a bad credit score, you should still try to aim for a good credit score of between 661 to 780, giving you access to better payment rates.
Does leasing a car affect credit score?
As with credit card payments and other bills, car leasing does affect your credit score. Your credit score can be negatively affected if you fail to keep up with the monthly repayments, but it can also improve if you consistently pay on time.
Why is a credit check carried out when leasing a car?
A credit check needs to be carried out when leasing a car so that the finance house can determine if you will be able to afford the monthly payments. The higher your credit score is, the better.
Can I lease a car if I have a bad credit score?
It is still possible to lease a car with a bad credit score. Some lending companies and credit unions are tailored specifically to customers with a bad credit score, but your lease options will be limited and you may end up with bigger monthly payments.
Using a guarantor on a car lease
Using a guarantor on a car lease deal means that if you aren't able to make a payment, your guarantor will be able to pay on your behalf. In order to qualify as a guarantor, they should usually be a family relative, be aged over 21, and have a good credit rating.