Is renting a car a good idea for you?
When it comes to renting rather than buying, whether or not that’s a good idea depends on your credit, your financial situation, and how much you value a car.
Thinking of renting your next car?
Your credit history dictates your buying and leasing power. This is because your credit history generates your credit score, which gives lenders and leasing companies a sense of your creditworthiness.
If you have have your eyes on a brand new rental agreement, but you are not sure if you should go through with it, the first thing you need to do is check your credit. New car leasing is almost always reserved for borrowers with good to excellent credit scores.
If your credit score has seen better days, you’re probably more likely to get approved for auto financing rather than leasing. The vast majority of new vehicles are leased to borrowers with a credit score above 670.
Also, the better your credit score, the better the money factor you are likely to qualify for. The money factor in leasing is like an interest rate on a car loan, both of which are largely influenced by your credit score. If you get approved for a lease with a lower credit score, your monthly payment will likely be more expensive.
Can you afford a lease?
Reply to whether or not you can afford a lease can be tricky because lease payments are generally cheaper than loan payments. The cost of renting can depend on the money factor, how you treat your vehicles, how long you drive and how long the lease is.
With leasing, you have mileage limits, which vary by program. But if you tend to drive over 10,000 to 15,000 miles a year and don’t buy extra miles up front, you’ll likely end up paying extra when you return the car.
In addition, you must maintain the vehicle and return it in good condition. Non-rental cars are usually sold after they are returned, so the rental company wants the vehicle to be returned in good condition. If you return a car with excessive wear or neglect some necessary repairs, expect to pay to cover the necessary repairs or costs.
If you take good care of your vehicles and have enough income to cover repairs not covered by warranty, leasing could be a good deal for you if you want to drive a new car every few years. Which brings us to another point: are you okay with still having a car payment?
When you rent, you only pay for the time you have in the vehicle – you don’t pay for the entire car. If you are considering leasing for the foreseeable future, you will still have a car payment until you decide to finance or stop driving.
Another aspect to consider is the cost of auto insurance. When you finance or lease a vehicle, you must purchase comprehensive auto insurance. Since leased vehicles are generally new, you will likely pay more for auto insurance than if you financed a cheaper used car.
Benefits of buying a car instead
If your credit score isn’t up to par, driving a new car isn’t something you enjoy, or you’re just driving too much for a rental, financing a vehicle could be for you.
Funding has many advantages. One of the most important is that you gain equity. Equity is useful when you want to improve your commute, because if you have it, you can trade in your current car and assign that equity to your next vehicle.
With the purchase, you can also drive around your car as much as you want (within reason). Once you have paid off the vehicle, you are also not required to maintain full coverage auto insurance – you can upgrade to the minimum amount required by your state, which is usually much cheaper than full coverage.
If your credit score needs a bit of work, you’re also more likely to get auto finance approval with a bad credit lender, compared to a traditional lender and leasing company for one. leasing. You can also work to improve your credit score with a car loan, with the goal of getting approval for a new vehicle lease in the future by tracking car loan payments.
Get in touch with a bad credit auto lender
Looking to start your car buying journey? Start with us at Auto Express Credit. We connect bad credit borrowers to dealerships with bad credit loan options. Our network spans across the country and we will endeavor to find a dealer who can meet your unique credit situation.
To get started, fill out our auto loan application form and we get to work right away!