Lease A New Car With Bad Credit And No Down Payment

Leasing a car with bad credit and no down payment is the best way to start driving an automobile when you have a tight budget and cannot afford the usual bigger down payment for buying a car. Compared to a car loan for the same car make and model, your monthly car lease payments will be lower as well.

Furthermore, many major car manufacturers are now offering good deals on new car leasing to help boost their sales, so it is a good time to consider getting a new vehicle. However, car leasing may not be better for every new car buyers. If you have never tried to lease a vehicle before, there are some things you need to know in order to make the right decision whether to lease a new car or take out a loan.

Like the traditional car purchase loan which is one way to finance your vehicle ownership, leasing is a way of financing your use of a car for a specified time period over 12 months, 24 months or 5 years etc. It may sound like renting, but leasing is slightly different because you get an option to buy out the vehicle cheaply at the end of your lease agreement.

You are required to keep the leased car well maintained and pay for repairs if necessary. The car ownership still belongs to the lease provider and if you return it in poor condition at the lease end, you can be charged a expensive repair bill.

A car lease is actually a contract with a car leasing finance company that agrees to let you drive and retain possession of a car while it still belongs to the company. You agree to pay for the part of the vehicle's value that is used up during the lease period, as well as for the necessary auto insurance, licenses, taxes, maintenance or repair works.

The car lease finance provider continue to retain ownership and title to the car until the lease end date. Here, you have the option of returning the vehicle and switch to a new lease for a new car, or to buy the vehicle at a certain price stated in your contract and continue driving it.

So why would you want to lease a car instead of taking a car loan or renting a vehicle? These are the advantages of vehicle leasing which may be applicable to you:

• You can get a new car with low or no money down.
• You pay cheaper monthly car lease payments.
• You can upgrade to the latest cars frequently once your lease agreement expires.
• No need to worry about selling or getting rid of your old car
• There are lesser car sale tax to pay

So where can you lease a new car with bad credit and no money down? Actually, car dealers are not the same as car lease finance companies. Most of the time it is the financial divisions of major car manufacturers such as Toyota Financial Services that you should approach, and they are the ones that are always advertising on the latest $100 dollars car lease offers. Sometimes, you can get cheap car lease deals from banks and credit unions as well.

Your local car dealers only act as an agent for the leasing provider such as Ford Motor Credit or GMAC etc, and handle the paperwork to arrange your lease contract for a new Ford vehicle. Since car dealerships usually work with several lease providers, you can pick any brand of car you like and lease it. The dealer will then sell your chosen car to the car lease finance provider, who will then lease it you.

Note that you do not have to use the in-house or captive car leasing company recommended by the dealer. You can arrange for pre-approved car lease financing from a bank, credit union or online discount car leasing company for cheaper rates. Some of these lease providers will even offer extra services to help you negotiate for cheaper car prices at the dealers so that you save some money.

So what are the disadvantages of personal car leasing? Firstly you do not own the vehicle during the entire lease period, so you cannot try to sell it away or use it as collateral for a car title loan. If you want to eventually own the lease car, you have to buy it when it comes off lease.

You need to continue with your car lease contract until it expires, so there is some inflexibility involved. Typical car lease period are for 24, 36, 48, or 60 months and a longer term car lease means cheaper monthly payments compared to short term 12 months car lease contracts. Trying to end a car lease early can be very troublesome and there are penalty fees required.

A lesser known fact is that car lease contracts usually include an annual mileage limit such as 10,000-15,000 miles. If you exceed this, you will have to pay a fee for every mile over the limit. There are also high mileage car leasing available, but will be more expensive because of the higher rate of wear for the lease vehicle.

Car lease finance providers will check your FICO credit score before approving your application. If you have a lot of debts and records of late payments or loan defaults, it can be difficult to get cheaper car leasing deals. Bad credit car leasing companies will ask for a bigger down payment up front and higher finance charges, although the same can be said for bad credit car loans as well.

When comparing car lease quotes, you need to take note of the vehicle selling price, the money factor or interest rates, the car residual value at the end of the lease term, acquisition fees, deposition fees, and various leasing fees. Be prepared to shop around in order to get the cheapest rates, especially for those drivers that need bad credit car leasing with no money down.