My Guide – A realistic way to lease a new or used car with a poor credit history
Car leasing with bad credit
Here, The Used Car Guy discloses a viable way to lease a new or nearly new car with a poor credit history. Those with a discharged bankruptcy order, recently divorced or starting their own new business can also qualify.
The company I advocate for car leasing with bad credit is CVS Contract Hire and Leasing.
Click here to visit their website and make an application.
The frustrations of having a poor credit history
If your credit file score is low and you have a history of bad debt you already know that lending money is incredibly difficult. High street banks, credit card loans and mainstream car finance companies are all out of the question.
The underlying problem with conventional lending is that the lending decision is automated and based largely on your credit score.
Based on your background history and previous credit arrangements a computer database quantifies if you are eligible for credit with a simple yes or no answer.
There is almost no human consideration and there’s little you can do about it apart from work to improve your credit score and to reapply again in a years time.
Uncovered: a different approach to bad credit leasing
I recently learned of CVS Contract Hire and Leasing and was pleasantly surprised with their approach to bad credit car leasing. Whereas a mainstream lending company will run a credit check first and base their decision on what a computer says, CVS have adopted a refreshing attitude.
Step 1 – Affordability
CVS first want to determine if a car lease is affordable to you. For example, they like to know what your total monthly income is, compare that to your expenditure and calculate the expendable income you and/or your household has.
My tip – Before you apply with CVS I strongly recommend that you check what income you have left over each month after paying your rent/mortgage, utility bills etc. If you have any reasonable amount of money left over to maintain another regular monthly payment you’ll have an excellent chance of being accepted with their bad credit car leasing finance.
Step 2 – Traceability
If you are reasonably certain that you can afford a new car you’ll also need to be traceable. This means providing some proofs in way of utility bills, employment etc…
You need to show:
- Your last three years of residency (utility bills and/or bank statements with your residing address)
- History of employment or self-employment (if applicable)
- Bank account information
- Financial arrangements with a spouse (if applicable)
These are pretty standard questions that anyone trying to obtain credit would expect to answer.
If you can reasonably supply this type of information you are well on your way to leasing a new or nearly used car with CVS.
Remember, these checks are carried out before any type of credit history check.
So, there are no unnecessary credit searches against you unless Compass Vehicle Services are reasonably certain they can offer you bad credit leasing. In my opinion, this is best practice as multiple credit checks in a short period of time can adversely effect your credit history file.
CVS are a small, family run business that adopts a manual, case by case approach to each car lease applicant. Instead of looking for reasons to disqualify applications they support applicants and work pretty hard to help them get a new car.
Step 3 – Credit check for bad credit car leasing
Once ‘Traceability’ and ‘Affordability’ criteria are met CVS will move onto step 3.
As we know, CVS do not rely on the credit check to make their decision but merely use it as ‘additional information’ that’s combined with the information already gathered during your application.
Those that reach the credit check stage are already well on their way to getting a bad credit car leasing deal. If there were any major discrepancies up to this point CVS wouldn’t bother running a background check.
The purpose of the credit check
CVS are less concerned with a few county court judgements or past bankruptcy order. However, should they see a string of county court judgements (CCJ’s) that are either very recent or repeated year on year you are not likely to be accepted. CVS Ltd need to know that the information you are providing them is accurate. They need to understand if you are likely or unlikely to honour a new financial agreement.
If you have been bankrupt in the last five years CVS want to know and compare it to the information you provide them. My advice is to be open and honest with yourself and CVS from the beginning. Tell them if you have some CCJ’s, a Debt Relief Order or need a new business car leasing deal.
Being upfront in your initial enquiry is the foundation of a successful application.
Winning a car leasing bad credit application
Preparation is the key:
1. Ensure a monthly car payment is affordable to you
2. Understand what your expendable income is so you know how much you can spend per month
3. Account for car insurance, road tax, servicing costs as part of your monthly payment
4. Find out if you can provide a track record of your residence and employment over recent years
5. Be ready to answer questions as accurately and honestly as you can. Get a copy of your credit file from Experian or Equifax before you apply
New applicants can get a free copy of their Experian Credit File before making a poor credit car leasing application. It’s best to know the facts about your financial history so you can give the right answers to the standard questions CVS will ask you.
If you take these steps before calling their office or applying online you can pretty much decide for yourself if you’re going to get accepted.
The difference between prime car finance and sub-prime bad credit car leasing finance with CVS
- There is no APR or interest rate – instead of calculating interest and admin fees you get a simple monthly payment for a set period of time, usually three years although two-year contracts may be available.
- There is no deposit – rather than a fixed deposit of let’s say, 10%, CVS need an ‘initial payment’ (i.e. the first month’s rental) that’s usually equivalent to three times your normal monthly repayment. Having been in contact with CVS I know that a little negotiation might be available around your ‘initial payment’. But, because CVS look at affordability you should already know if this initial payment is something you can manage or not.
- Warranties – CVS generally deal with new cars that are delivered with a manufacturer’s warranty. But, even if you lease a nearly new car it will most likely have a manufacturer’s guarantee. Just keep in mind that the car needs to be serviced under manufacturer guidelines. It’s usually best to have the car serviced at the supplying dealers to avoid any future complication. But, if you are using genuine parts it’s still possible to keep the maker warranty valid. You’ll need to look into this further as every new car dealer has their own set of stipulations.
- Mileage – amazingly, CVS allows up to 15,000 per year on a general lease, however, because of their application process, they are able to work on a mileage that works for your individual requirement. This is excellent as even most PCP deals and prime car leasing companies cap you at 10,000 miles per year. For me, this is a real bonus and another important reason why I recommend CVS to anyone that has a bad credit history but is in serious need of a new car.
Who can qualify for poor credit car leasing with CVS?
- Those with poor credit history
- Bankrupts (you must have been released from your bankruptcy i.e. you were declared bankrupt more than 12 months ago)
- Anybody in an IVA or in a debt management agreement
- Start-up business owners and companies in CVA’s
- Those expecting some type of non-status car leasing
- Anyone that can provide proof that the car leasing payments are affordable
More helpful car financing articles from The Used Car Guy
I do understand the frustrations and limitations that come with having a poor credit history file. Most that have found themselves in this position have legitimate reasons for their situation and are simply looking for a company or individual that is willing to support them to the road of financial solvency. CVS are one such company and I believe they are your best opportunity to a new or nearly new car.
Let me know if you have any questions or comments at:
The Used Car Guy