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If you are thinking about getting a car, you may be deciding between buying or leasing. And if leasing seems like the right option for your finances and lifestyle, then you probably want to know what is needed to seal that deal.
Leasing a car typically requires both some cash and a solid credit score. If you have a high credit score, you may snag the best possible (meaning lowest) interest rate. If your credit history is not solid, then you may face higher rates or have difficulty getting approved.
Here, we take a closer look at car lease requirements, including the minimum credit score you’ll need, plus whether leasing a car can hurt or help your credit moving forward.
Key Points
• Leasing a car typically requires a credit score of 670 or higher, with an average of 755 in 2024.
• Lower credit scores can lead to higher interest rates or difficulty in lease approval.
• Regular, on-time lease payments can positively impact your credit profile over time.
• A diverse credit mix, including a car lease, can also positively affect your credit.
• Before applying, check credit reports and (if necessary) correct any errors to enhance approval chances.
What Are Car Lease Requirements?
A car lease is essentially a long-term rental agreement where you pay to use a vehicle for a specific period, rather than buying it outright. When you apply for the lease, the financing company will want to make sure that you are a responsible borrower. One way they can assess that is by looking at your credit score.
So do you need good credit to lease a car? The answer is, typically yes. Having good credit may make it easier to lease a car because a leasing company may not see you as financially risky as someone who has poor credit. Not all leasing companies will necessarily approve a car lease for someone who has a low credit score.
You might also need to prove that you have a job with a certain income when you’re leasing a car. Minimum income requirements vary by lender, but you typically need to provide pay stubs or tax returns to prove your employment and salary.
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What Credit Score Do You Need to Lease a Car?
Credit scores typically go from 300 to 850, with five credit score ranges:
• Poor credit score: 300-579
• Fair credit score: 580-669
• Good credit score: 670-739
• Very good credit score: 740-799
• Exceptional credit score: 800-850.
There is no one specific credit score you need to lease a car, since the minimum credit score requirement varies by dealership. According to Experian® data, however, customers leasing new vehicles in 2024 had an average credit score of 755, which is just above “good” credit, edging into “very good” credit.
While it’s possible to lease a car with a lower credit score, you might end up having to pay a higher-than-average interest rate or put down a big down payment to get approved.
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Leasing With a Credit Score Above 680
The credit score to lease a car and get favorable rates is one that’s considered at least “good,” meaning between 670 and 739, or higher. Having good credit typically makes it more justifiable for lenders to approve you for the lease because it’s less of a risk to them.
Just as with any type of financing, applicants who have good or better credit may be offered lower interest rates on auto leases. Having an above-average credit score could give you more negotiating power over the rates and terms of the car lease.
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Leasing With a Credit Score Lower Than 680
Having a lower credit score means you’ll likely have difficulty finding a company willing to lease to you or you’ll pay more to lease a car. Leasing companies may see you as a risk, based on your credit history. You might find that having a trustworthy cosigner on the lease could help you get a lower interest rate or better terms than if you’re applying on your own.
If your credit score is lower than 680, you might want to work on building your credit profile before leasing a car so you can get a better deal. A good place to start is by checking your credit reports from the three major credit bureaus, which you can do for free at AnnualCreditReport.com.
It’s important to check your reports for accuracy — if there are any errors, contact the credit bureau that issued the report.
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Building Your Credit Before Leasing
There are several ways to build your credit profile before leasing a car. Two of the most important to consider:
• Pay down debt. This will lower your credit utilization ratio or rate, meaning the percentage of your credit limit you are using. “One way to positively impact or maintain your credit score is keeping your credit utilization low,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “Keeping it below 30% is a good starting point, but the lower the better.”
• Pay on time. Be meticulous about paying your bills on time or even early. Just one or two late payments can have a negative impact on your credit profile.
• Limit new credit applications. Each application for new credit results in a hard inquiry on your credit report, which can slightly lower your score.
Can Leasing a Car Build Credit?
Any time you apply for credit, you have the opportunity to build your credit. A car lease is credit, just as a car loan would be credit.
How you manage your lease payments affects your credit reports just as a loan would. Making regular, on-time monthly payments can impact your credit in a positive way. Late or missing payments, on the other hand, can have a negative influence on your credit.
In addition, a diverse credit mix, which can include a car lease, may have a positive impact on your credit profile, especially if you have limited credit history.
Can Leasing a Car Affect Your Credit Score?
As mentioned, paying a car lease on time can be a positive thing. However, missing payments or being late with payments could negatively impact your credit, making it harder to secure loans and leases with good terms in the future.
You may also see a small drop in your credit score when the lease begins because your credit report will show a new account is open. You may see a similar small drop when the lease is terminated because the account is closed. Both of these credit events — opening and closing a credit account — can have a temporary negative effect on your credit.
If you’re shopping around at different leasing companies over the course of a few weeks and apply for leases at those places, there will be inquiries into your credit history by the leasing companies. However, those multiple inquiries may show up as just one query on your credit report and minimally impact your credit.
5 Things That Impact Your Credit
Here are factors that can influence your credit profile:
1. Your Payment History
The single biggest factor in your credit score is your payment history, which can boil down to making payments on time, month after month. That can help build your credit. Paying late or not at all can negatively impact your credit.
2. The Amount Owed
This factor looks at the amount of debt you’re carrying relative to your available credit (credit utilization). High credit utilization (using a large portion of your available credit) can negatively affect your credit.
3. The Length of Your Credit History
Having a longer credit history and having managed lines of credit well for years can benefit your credit. It shows that you can successfully borrow and pay back money.
4. Your Credit Mix
Having more than one kind of credit account can show that you manage borrowed funds well. For instance, it could be helpful if you have handled both installment debt (student loans and car loans are examples of this) and revolving accounts (such as credit cards) well.
5. New Credit
If you apply for a number of new lines of credit and have what are known as hard credit pulls done as part of this, your credit could suffer. It can look as if you are applying for a lot of new debt and may soon be overextended rather than financially stable.
The Takeaway
It’s important you consider what credit score is needed to lease a car before you go car shopping. Checking your credit reports in advance will uncover any surprises in your credit history before you’re at the dealership.
If you notice any blemishes in your past, you may want to take steps to positively impact your credit profile, such as making on-time payments and paying down debt, before you lease a car. This may help you save money on your car lease and give you more negotiating power.
The less you have to spend on interest and fees, the farther your money can go while leasing. Successfully managing leases, loans, and credit in general is part of good financial habits. Having the right banking partner can also enhance how well you handle your cash.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
Can you lease a car with a 600 credit score?
While it’s not impossible to lease a car with a 600 credit score, it will likely take more time and energy to find an offer. You will also probably pay a higher interest rate than someone with good or better credit, meaning you will pay more over the long term.
Does leasing a car hurt your credit?
When you apply for a car lease and the leasing company pulls your credit file, you may see a small dip in your credit score in the short term. After that, whether the lease hurts your credit depends on how well you manage the account. If you make on-time payments, it could positively impact your credit profile, but if you pay late or miss payments, your credit could suffer.
Is it better to lease or finance a car?
Whether it’s better to lease or finance a car will depend on your particular financial situation and goals. When you finance a car, you can eventually own it outright. It’s similar to buying a home with a mortgage. Leasing, on the other hand, is similar to renting. You never own the car or have it as an asset, but then again, you might like “trading up” every few years.
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