You’ve been saving up, and now you’re ready to buy your dream car—but how can you afford it? Maybe you thought about getting an auto loan, but a low credit score or no cosigner made that impossible. Or maybe you have the cash to spend but need to pay off high-interest debt before you invest in something else. Fortunately, there are other ways to get into the driver’s seat without breaking the bank, including car leasing. Learn all about this affordable alternative here—including whether or not it’s the right choice for you.
What is Car Leasing?
Essentially, car leasing is a way of renting a vehicle and paying for it via monthly payments. So, if you don’t have enough cash on hand to buy a new car, it might be your best option.
Is It Better To Lease Or Buy a New Vehicle?
When it comes time to purchase a new vehicle, you have a few options. Depending on your financial situation and driving habits, it may be more advantageous for you to lease or buy.
How Does Leasing Work?
After you’ve shopped around and found a car that you like, it’s time to decide on what type of lease terms you’d like. Depending on what your situation is, you may want a short-term or long-term lease.
Are You Eligible for Auto Financing?
Before you start looking for a car, take time to consider what kind of auto financing options are available to you. If you have no credit or have bad credit, there are still ways that may allow you to get an auto loan.
Car Payment Options
a) Monthly payments. Make a set amount of monthly payments over a specific period, usually three years. At completion, you own your car.
b) Short-term leasing. Like a traditional lease, short-term leasing has lower monthly payments and a longer overall term of up to five years. At completion, you own your car.
c) Cash out leases or buyouts. With a cash-out lease, you make monthly payments over an agreed period of time and receive a refund at completion in addition to your monthly payments.
Most car leases have a 36-month contract. According to Lantern by SoFi, “You can often shorten or lengthen your lease by three months if you choose.” There is also no money down leases available in certain circumstances.
What Happens at the End of My Lease?
You have two options at the end of your lease: buy your car or return it. You can see what kind of deal (if any) your manufacturer offered you and how much mileage your car has left.
How Can I Refinance an Auto Loan?
Start by getting in touch with your auto lender directly. Before calling or filling out any forms online, make sure that you know exactly what kind of vehicle loan you currently have and what information will be required before they can give out any more information about refinancing options.
What to do to Refinance a Car Loan With Bad Credit
If you’re thinking about how to refinance a car loan with bad credit, there are a few important things you should know.
• Auto refinance lenders are still likely to approve you for a car loan if you have a low credit score.
• Lenders know that a low credit score doesn’t necessarily mean you can’t afford payments. For example, there is no risk of default if you buy a car with cash.
• Lenders will look at your income, not just your credit score. Have a stable job? Showing regular paychecks means you can probably afford monthly payments.
You may think that if you have bad credit or low income, it will be impossible to get approval for an auto refinance. The truth is that it will depend on your situation and how much risk a lender is willing to take.
The car leasing process can be broken down into three main stages: finding a lender, negotiating a lease, and finally taking delivery of your car. It’s worth noting that each financing option has its pros and cons.