I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.See all posts Frank Gogol
Minimum Credit Score for a Car Lease
Deciding to lease a car can be a difficult decision – especially if you are a visa holder. The entire process might be a source of confusion for you. This is exactly why we’ve comprised this comprehensive guide for you: to bring some clarity on the topic. More specifically, we will discuss the minimum credit score for a car lease, so that you know what to expect before you get started.
What Is a Car Lease?
For the most part, we could say that a car lease is similar to a loan. In essence, when you lease a car, this means you rent it in exchange for a monthly fee. You’ll have to pay the monthly fee for the entire duration of the lease.
At the end of the term, you will have the possibility of buying the car at the calculated buyout price. Another alternative would be turning it back in. Ultimately, you can choose what makes more sense to you.
Meanwhile, when you purchase a car, this means you are its owner. This applies whether you apply for a loan or you pay in cash. Either way, at the end of the loan, you are the official owner of the vehicle.
When it comes to a car lease, though, things are a tad different, so to speak. What you do have at the end of the lease would be several years of making payments – depending on the duration of the contract. In addition to that, if you’ve been responsible and made timely payments, your credit score will have improved.
Do I Need a Certain Credit Score to Lease a Car?
Are there any specific requirements in terms of minimum credit score for a car lease? This is a good question. Usually, your credit score matters in such equations. That is to say, it should be good.
More specifically, your credit score should be 740 or above that. Most lenders will see this as being excellent. Therefore, if you have such a credit score, then you will benefit from convenient lease terms, for the most part.
As for scores ranging from 680 to 739, they are also considered good. Therefore, if you fall into this category, your application will most likely be approved. In regards to scores that fall behind this range – more specifically between 620 and 679, they are almost good.
The likelihood of getting approved is still high. The one distinction would be that the interest rate will be higher. A score that is lower than 619 might impair your capability of getting a car lease, at least at convenient terms.
When it comes to the minimum credit score for a car lease, we could say that it is somewhere around 620. Most likely, you will get affordable loan terms if your credit rating is over 660.
3 Reasons Why a Visa Holder Might Want to Lease a Car
The question that naturally follows is whether you should consider leasing a car at all or not. Most people think that leasing a car is far from being a sensible decision. But it this really so?
The truth is that there are several reasons why you might think of leasing a car – particularly as a visa holder. This applies especially in the case of 1099 contract workers. On top of that, leasing a car gives you the chance to enjoy the latest technology in the domain, but there are other, more practical reasons that make it an attractive choice.
In the position of a car buyer, you’ll imminently worry about the reliability of the car. Is this really the right car for your needs? Is it as reliable as outlined by the manufacturer? These are only some of the questions each car buyer torments himself/herself with.
On the other hand, when it comes to leasing, you don’t have to worry about anything related to the reliability of the car. You don’t need to worry that it might not age as you expect it. Also, you don’t have to concern yourself with interior wear and tear, rust or other similar issues.
Usually, these problems occur when the car has already been used for several years in a row. Luckily, this doesn’t apply to leasing – this might make it an attractive choice.
On a different note, as an immigrant, if you’re still financially recovering after the costs of relocating in the US, a car lease might be better for your financial stability.
If you were to take a loan in order to get an auto loan, the odds are that you’ll end up paying more. And this applies to the same vehicle. As a visa holder, you might not be able to do so. This makes sense, though – when you finance a car, this means that you’ll pay for its entire value.
Leasing, on the other hand, means that you’re paying mostly for the depreciation of the car during the time you’re using it. If you’ve been back and forth about car ownership and whether it is the right thing for you or not, then leasing might be a better alternative.
3. Less Commitment
And lastly, choosing to lease a car instead of purchasing it equals less commitment. As a visa holder, you might not know exactly how long you will stay in the country. Therefore, this option might be a sensible one especially if you’re uncertain about the future. Unfortunately, there are no guarantees whatsoever when it comes to visa renewals, so you cannot anticipate that far into the future.
Everything you need is to have the minimum credit score for a car lease and that’s about it. You’ll be able to use the car you want for the time you need it.
3 Steps to Improve Your Credit Before Applying
Let’s say that you’ve decided that getting a car lease is best for your circumstances. Nevertheless, you don’t meet the requirements regarding the minimum credit score for a car lease required by most lenders. What do you do in this case?
The good thing is that there are several ways in which you can enhance your credit rating prior to applying. We’d like to give you some suggestions on how to do that.
1. Make On-Time Payments
Basically, what matters most when your credit score is calculated is your payment history. This indicates your reliability as a borrower. Therefore, you should make a priority out of making on-time payments. This will make a difference in your credit rating.
2. Pay Off Credit Cards
If you have a lot of credit cards, it might be a good idea to limit your expenses and, instead, pay off credit card balances. This is a fool-proof and quick way of enhancing your credit score.
3. Avoid Applying for New Loans
And finally, another tip worth noting would be to avoid getting new loans. Usually, after applying for a new loan, this will imminently lower your credit score. Therefore, if the situation isn’t urgent, you should postpone that.
How Much Does a Car Lease Cost?
As you might expect, the cost of a car lease is determined by several aspects – including the type of vehicle you pick. Another element would be the estimated depreciation of the car over the duration of the lease, rent charges, fees, and taxes.
As for the average cost of a car lease in the case of a new vehicle, it is around $450 per month if we’re talking about a three-year lease. In the case of an auto loan, the estimated value of the payment is around $550. When it comes to popular models, the difference in terms of monthly payments can be even more significant.
That has to do with the fact that lease payments are established by the expected value of the car at the end of the lease.
Use a Personal Loan to Get Your Car Lease
If you don’t have the financial means to get a car lease, you can always get a personal loan. That’s because you have flexibility when it comes to using a personal loan. Here are the main steps you should follow if you want to get a personal loan with Stilt.
Send your application
Whether you are an international student or a visa holder, all you have to do is send an application. The application contains all the information we need to send you an offer.
Get an offer
As soon as your documents are examined and verified, you’ll get an offer. If you agree with the loan terms, you’ll have to sign the contract. In up to three business days, the money will enter your bank account.
Start repaying the loan
Now, all you have to do is start repaying the loan. To ensure that you don’t miss any payment, you can choose the autopay setting. This makes it very easy to stay ahead of your payments.
We hope that this article answered most questions you had regarding the minimum credit score for a car lease. If you don’t qualify for that, you can always apply for a personal loan with Stilt. We also provide convenient lease buyout loans and soft credit check auto loans. All you have to do is browse through our website and see what meets your needs best.