Leasing a van is a fantastic option for those with bad credit who need to transport larger loads. It's important to understand that while you can still lease a van with bad or no credit, you'll most likely be asked to pay a higher initial rental and higher monthly rentals than someone with good credit. There are also some things you can do to improve your credit score, which may help you get a better deal on a van lease. It may not be as difficult as one might think to lease a van with bad credit.
How leasing a van with bad credit works
There are two major ways that you can lease a van with bad credit:
- You can go through a financing company that specialises in leasing vehicles with low credit scores.
- You can go through a transportation company that will lease a vehicle to you that has an outstanding balance but has gone to a collections agency in the past.
If you want to lease a van with bad credit, the best way to approach this is through a financing company that specialises in this.
These companies will analyse your credit score to determine whether you're a good candidate for leasing. There are different credit scores, ranging from 350 up to 850. The higher the credit score, the better.
How can I improve my credit score?
You're not alone if you have bad credit or have tried to lease a vehicle, only to have your application rejected.
In fact, 25 per cent of all vehicle leases have been refused in the past two years. If you are applying for a van lease, you should be aware that while your credit score is affected by your financial history, your credit utilisation and payment history are the most important factors in your credit score calculation. The higher your credit utilisation rate, the more likely your score will be impacted.
What to do:
- Register on the electoral roll - If your name isn't on there, you'll have a much more difficult time getting credit
- Check for mistakes on your file - Even a slightly incorrect address can lower your score. So double-check all of the details and report any incorrect information right away
- Pay your bills on time - Paying on time for a phone, landline, or internet contract is a great way to demonstrate to lenders that you can manage your finances
- Check if your credit score is linked to another person - If your spouse, friend, or family member's credit rating is linked to yours via a joint account, it may have an impact on your personal rating if they have a low score
- Check for fraudulent activity - Contact the credit reference agency to have your file updated if something on your credit report is incorrect or does not apply to you. For instance, suppose someone applied for credit in your name without your knowledge
- Check for County Court Judgements (CCJs) - Receiving any county court judgements for debt will have a negative impact on your credit score. If you're having trouble making payments, you can get free debt advice online
- Check to see if existing debt is not extremely high - Before applying for new credit, you should ideally pay off any outstanding debt. This is due to the fact that banks, building societies, and credit card companies may be hesitant to lend you more money if you already have a lot of debt
- Be aware of moving home a lot - Lenders are more likely to lend to you if you have lived at the same address for an extended period of time
- Maintain a low credit utilisation rate - Your credit utilisation is the percentage of your available credit limit that you use. For example, if you have a credit limit of £1,000 and have used £500 of it, your credit utilisation is 50%, implying that you have used half of your credit limit. Using less of your available credit is usually viewed positively by lenders and will raise your credit score. If at all possible, try to keep your credit utilisation at or below 25%
How long will this take?
In general, credit history is gradually built up over time as the number of on-time payments increases.
The longer a bill goes unpaid, the more likely it will have an impact on your credit score. Keep an eye on your credit score to help you identify problems.
The majority of negative marks will remain on your record for at least six years. After that, everything in your file is deleted. This includes late payments, defaults, bankruptcy, and CCJs.
What to know before leasing a van
If you're considering leasing a van - consider the following:
- Your credit score.
- Your cash flow.
- Your credit history.
- Your financial resources.
A low credit score can limit your leasing options. In the first place, you'll have a difficult time qualifying for a lease. To make matters worse, most rental van companies have a credit score requirement ranging from 300 to 750. Credit scores are based on credit reports provided by creditors. According to ConsumerAffairs.com, drivers with credit scores below 699 can expect to pay an extra £120 for a rental than those with credit scores above 740.
You shouldn't have any problems leasing a van with good credit. More so, leasing a van and paying your monthly rentals on time will help to improve your credit score further. If you have poor credit, it might prove more difficult to obtain a van lease but it's not impossible. With a little planning and research, as well as the tips provided above, you can lease a van even with bad credit. You can of course, avoid the commitment of leasing, but you must be prepared for the total cost of the vehicle.
What are your thoughts on leasing vans with bad credit? How did you manage to do it?