Most people that have bad credit are looking to save money and lower their monthly bills. As leasing is generally less expensive by the month, it’s natural that folks with bad credit would gravitate towards this option. Lower payments and more car for the money… What’s not to like, right?
Hold it, right there.
Leasing is not the best option if you have bad credit. It’s also very difficult to get approved for a lease with bad credit. Now, that may not be what you want to read, however, it is the truth.
Car lots promote leasing like it’s wonderful. Drive more car for less money with lower car payments. That’s not all there is to the story, though.
You see, your car payments are lower, but your insurance premiums increase. The reason for this is because the leasing company requires that you have higher limits of liability coverage on your auto insurance. This typically is not something your salesman is going to explain to you. You’re simply not saving as much money as you think you are going to by leasing.
Also, if you were to keep a leased vehicle and actually buy it at the end of the term, you will pay an equivalent of 10 year auto financing for the vehicle. This is because lease payments are primarily interest charges and fees. Very little goes towards paying down the principle owed on the car. That’s right. You still owe money on the car, just like if you had purchased it. This is a major issue when you end up owing more on it than it’s worth and it comes time to trade it in.
bad credit car leasing