Does Leasing a Car Affect Your Credit Score?
Does Leasing a Car Affect Your Credit Score?
Posted on August 18, 2023
We write a lot about how car loans can impact your credit score and how your score influences the cost of the loan, but what about leasing? Does leasing a car impact your credit score? Does having a good score make a lease cheaper?
We asked our car loans team to tell us all about whether leading a car impacts your credit score or whether a good score makes a lease cheaper.
Car Leasing & Credit Score
A car lease will impact your credit score and it is mainly positive.
Just like a car loan, a car lease is a finance agreement that you pay monthly. Every payment you make on time will be reported to the credit bureaus and will contribute towards your payment history.
As the payment history makes up 35% of your credit score, paying on time will benefit your score. Missing one can also negatively impact your score!
Expect leasing companies to scrutinize your credit score just as much as a lender might. Even though you’re not actually borrowing money, they still need to be reassured that you can afford the lease payments and that you have a history of always paying on time.
Credit Mix
Your credit mix, the different types of credit you have access to, also makes up some of your score. It’s around 10% of your overall score, so is less influential than payment history but every little helps.
The more types of credit you have, the more positive the impact. As a lease is one more type of credit, it contributes to this.
Does Having Good Credit Make a Lease Cheaper?
Having a good credit score doesn’t always make a lease cheaper but it can improve your chances of being approved for one.
In a car loan, a good credit score will get you lower interest rates. As leases are rental agreements, the same principles don’t apply here.
However, some leases will offer more competitive rates to those with higher credit scores. Much will depend on the cost of the lease and whether you’re working with a dealership, manufacturer or leasing company.
Can You Lease a Car With Bad Credit
Much will depend on how bad a bad credit score is. Just like car loans, some companies look past the credit score while others don’t.
You can still lease a car with bad credit but you may be restricted in the companies willing to work with you and the type of car you can lease.
Don’t worry though, we work with anyone, with any credit situation and can find competitive finance deals whatever you’re looking for!
Leasing a car is a viable way to drive a new car every couple of years. It’s cheaper than a loan but comes with more strings attached. Contact our team to discuss your options.
When you’re ready for a car lease or loan, get in touch with the auto loan experts at Northway Ford for great deals on auto finance.
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