Most 18-year-olds have limited funding options for driving a new car. However, can you lease a car at 18 with no credit? The answer is yes, but not always easy. In this guide, we explore all the options available for leasing with no credit.
Car Leasing at 18: No Credit Required!
You will face car leasing obstacles if you have no credit or bad credit. But take heart; neither means that you cannot become a lessee.
Leasing companies may require a higher down payment or monthly payment because your credit score only qualifies you for higher interest rates.
Credit scores change over time and between dealers, but according to Car Law Info, the minimum requirement is 620. However, Experian’s State of the Market Report data indicates that the average lessee’s credit score is 736 in 2023.
The minimum income requirements making you eligible to lease a car is between $1,500 and $2,000 a month. But the more you earn, the easier it is to get leasing.
The Benefits of Leasing a Car at 18
Many people prefer to become full-fledged vehicle owners, while others prefer leasing for its benefits. The benefits of leasing a car at 18 are numerous:
1. Lower Monthly Payments
Owning a car at 18 is very difficult because of your limited income. Leasing entails a smaller downpayment than buying, and you repay monthly, making it easier to budget. These lower monthly payments also make it easier to drive a better car than you would otherwise be able to afford.
2. Short-Term Commitment
According to your plan and requirements, a lease can last six months to a few years. You only pay for the vehicle over the respective time compared to buying a car on loan, which can take up to 7 years to repay. Therefore, once the lease expires, you can return the vehicle and get a new one. Upgrading to a newer car, if you are still paying off another, your current one can prove very expensive with a loan. A brand-new ride every few years with leasing is a better option!
3. Lower Initial and Running Costs
When leasing a car, your initial costs are lower than when buying a car, allowing you to drive a better vehicle without spending more. It’s a huge advantage that you can drive a car while it’s new and has the manufacturer’s warranty during its most trouble-free years.
Most leasing companies also provide free maintenance, oil changes, and insurance (which can otherwise be very expensive for young drivers). These are benefits that car owners don’t have.
When the time comes to exchange your car for a new one, you don’t have to worry about the car’s trade-in value or whether there is a demand for that model. You have the flexibility to hand it in and get the latest model.
Additionally, at 18, you are far from settled. Whether you plan to leave your home to study or work elsewhere, you need a safe and reliable car that matches your flexibility.
How to Lease a Car with No Credit at 18
You are starting independently with no credit history but need a car to get around. Here’s how to lease a vehicle with no credit at 18:
1. Add a Cosigner to Your Lease
The first option available to you is to think about adding a cosigner to the lease. It may be a family member, but it can also be a friend or someone willing to cosign the contract. If your cosigner has better credit, your eligibility and qualifying amount increase.
Your cosigner must trust you because they are responsible for repaying your loan if you can’t. Not everyone can qualify as a cosigner because the person you decide on must have a good income and credit to qualify.
2. Shop Around for Flexible Leasing Agencies
Not all leasing agencies are willing to work with leases with no credit. A few take a more flexible approach. However, remember that the more leasing agencies check your credit history within a short time, the more it can damage your credit score. Additionally, a lack of credit will also mean higher interest rates.
The best approach is to shop around first by asking a few dealerships, leasing agencies, and private lenders the right questions, like the minimum income requirements and credit score.
Once you have honed in on those whose criteria match your situation, ask them if you can apply for pre-approval before they move ahead with the hard credit check.
3. Increase Your Chances of Qualifying
Eligibility requirements make it very difficult to get a lease without credit, but it’s not only your credit score that counts. Other things like your income (which proves your ability to pay) are critical.
You can increase your chances of approval by ensuring you provide every source of income besides your earnable income. Include passive revenue, part-time work, and contract work. All references get checked before approval, so make them accurate.
4. Take Over Another Lease
Another option worth considering is taking over someone else’s lease. The best way to approach this is to find a leaseholder with reasons to consider giving their lease to you. A leaseholder may want to give up their lease because they cannot afford to continue paying it.
Once you have found the person, you still must approach the lender. They will follow the usual paperwork and credit check process before your transfer is approved.
If the lessee is having trouble paying, the lender may be more flexible in giving you the lease to avoid any defaulting. Furthermore, if there isn’t a lot of money left to repay on the lease, it’s easier for you to qualify.
5. Make a Large Down Payment
Lenders often overlook your lack of credit if you have a larger downpayment. You can make a larger down payment toward your lease in several ways. You can consider working part-time to enhance your savings if you already have a job. You can also ask your parents to loan you money or apply for a no-credit-check loan.
Tips for Securing a Car Lease at 18 without Credit
There are also other alternate leasing solutions that an article with tips for securing a car lease at 18 without credit must include:
- Purchase an old car – Most people prefer to buy a new car because they have fewer problems. However, an old car is easier to afford, and you can buy it outright without making repayments. In the meantime, save and sell it when ready to upgrade, adding the money toward your leasing. You can get one from the local salvage yard at a cheap price.
- Purchase or temporarily use someone else’s car – If you have someone in your family or a friend who owns more than one car, ask them if you can purchase it from them or rent it with a monthly payment. This has two benefits: the car doesn’t stand idle, and your friends or family are unlikely to charge interest on the loan.
- Find someone looking for a passive income source – If you know someone who can afford a second car, approach them to buy one and lease it to you. That way, they secure a stable second income source, and you get your vehicle leasing.
- Find lenders more interested in earning interest than your credit score – The truth is that these dealers expect you to repay as promised, but with them, you can purchase an older car and negotiate a loan with a low interest.
Exploring Car Leasing Options for 18-Year-Olds with No Credit
According to Consumer Reports, leasing has considerable upsides and some downsides. That can mean that buying a car on loan or paying cash for an older car can prove better in the long run. However, leasing often means you can drive a better car than you can afford with all the latest safety features and in the years with the least troubles.
Things get even better when you consider leasing an electric car. Besides the stability provided by leasing an EV in a rapidly changing market, you could also qualify for a $7,500 tax credit without meeting the requirements that the purchaser of EVs must meet. Therefore, you don’t have to prove your income level and provide information on the cost of the car and the manufacturing country.
Additionally, you don’t have to worry about sudden price drops by not owning the EV. Due to the short-term nature of leasing, you don’t have to worry about being stuck for many years with outdated technology in an auto industry sector with lightning-fast developments.
Getting Behind the Wheel: Leasing a Car at 18 without Credit
You have no credit for leasing a car at 18, but it doesn’t mean you cannot make plans for getting behind the wheel soon. Here are some strategies to help you build a credit score quickly:
Loans for Credit Building – A credit builder loan is one of the best tools to help build your credit score. The loan amount goes into a CD or savings account, and you make monthly payments. As soon as you have paid the amount in total, the money is free to access. You get an excellent boost to your credit score if you make your payments on time.
Prepaid Credit Cards – Get a prepaid credit card loaded with money. As you use the money, you pay it off monthly. These are reported to credit bureaus, contributing positively to your credit score. The credit card company may extend a credit line on your excellent payment history.
Become a Cosigner to a Loan or Credit Card – You must do this with a dependable primary borrower who pays their loans back on time, helping your credit score.
Use Your Bills – Bills like rent, utilities, and phones can help you build a good credit score. So, ask your landlord and service companies to report your payments.
The Road to Car Leasing at 18: No Credit, No Problem!
Leasing with no credit seems to mean no problem if you take some of the abovementioned measures. You can increase your chances of getting approved by saving for a larger downpayment, taking over someone else’s lease, or finding a cosigner. The road to car leasing at 18 is not smooth, but if you fail the first time, use our tips to get more credit and reapply as soon as you feel ready.