If you are a person with a bad credit rating, you might think that driving a brand new car for yourself is already beyond your reach. A car is a really expensive asset to buy that unfortunately, depreciates in value as you use it through time. That is why most people who buy cars, save up for an initial deposit and just simply applies for a car loan which pays off the car in whole but at the same time that would allow for easier monthly payments until the loan is fully paid for. But this option is only for the lucky few who have a good credit rating.
People with a bad credit rating are unlikely to get approved for car loans or if they do get approved, they are offered with extremely high interest rates that would only make the monthly loan repayment expense too tough. But do not worry, because if you are not one of the lucky few, then you could still have a taste of driving a brand new car through car leasing with bad credit. So when you actually think about it, there are still some bad credit rating holders who can be considered as the lucky few.
Country Court Judgment (CCJ) Holders
People who hold CCJs are those who have money owed but fail to repay on time, or repay at all for that matter. A bad credit rating is given because of course, the person failed to pay for his debt. Even with a court ordered CCJ, the debt is not removed from the person’s records. Although certain factors could be taken into consideration in the repayment scheme, depending on the current situation and circumstances that certain person is going through. If you have been issued such a court order, you do not have to worry about having the opportunity to lease out a car because you could still actually apply for a lease and have a chance at getting approved.
Consolidated Debt Holders
There are two types of consolidated debt repayments people with a bad credit rating could have. First is the Debt Management Plan wherein all of the current debts of the person involved is consolidated into one whole debt with a monthly repayment scheme designed for the whole amount. The financial advisor in charge of the debt would then be the one in charge of dividing these payments monthly to the different institutions the person owes a debt with.
On the other hand, with the IVA or the Individual Voluntary Agreement, the creditors of the person involved would have to agree on the repayment scheme proposed by an Insolvency Practitioner depending on the amount of money the person can pay to each creditor per month. If you find yourself in any of these consolidated debt payment schemes, you could still be eligible in leasing out the car of your dreams.
For The Self-Employed
Being self-employed is tough because having to proof your source of income and the financial strength of your business or freelance projects could be tricky as it does not come in a steady flow such as with employment wherein a monthly pay cheque is given. That is why most self-employed professionals are in a tight spot with a bad credit rating. These days however, it is not anymore a tedious and hard process to apply for a lease on a car even if you are self-employed.
Bankruptcy Filers
Bankruptcy is no joke and it is one of the worst ways you could sink yourself into a bad credit score. But it does not mean that you could bounce back and earn sufficient income for you to be able to get back up on your feet again. Unfortunately, even if you already found yourself living comfortably again, your previously filed bankruptcy may cause you a bad credit rating and give you a hard time applying for financial aids and services.
Nevertheless, even with the difficulty in loans and credit cards, lucky for you because you would still be able to lease out a brand new car you could use in your day to day activities.
How Do They Do It?
Because investors mostly fund the cars being leased out, more affordable and comfortable monthly lease payment schemes can be drawn so that even people with bad credit scores could easily afford it. Since they take away the involvement of banks and insurance companies, the company itself looks at each application so that your monthly repayment capabilities would be measured and not solely base it on only your bad credit rating.
By just proving you have a monthly income that could cover your monthly lease and passing such simple criteria measures, you would most likely be approved for a lease to a brand new car immediately. Not to mention the great opportunity to improve your credit rating as well at the end of your lease term.