Can You Rent a Car with Bad Credit?

Posted on

Leasing is a popular financing arrangement that allows drivers to rent a vehicle without making a purchase. Although leasing provides various advantages, it will not allow you to avoid the effects of a low credit score. However, if your credit isn’t great, don’t worry.

You can take several steps to improve your credit score before leasing a new car. Many dealers also specialize in low credit arrangements and alternatives to leasing. On Car and Driver, we’re here to give you all the info you need to rent a car, truck, or SUV, regardless of your credit score. Keep reading to learn how to rent the car of your dreams.

Want to buy a new car? Easily compare options from auto lenders below.

Your one-stop shop for comparing car loans.

Enter your information to see your auto loan options.

How Does the Car Leasing Process Work?

Leasing is an arrangement that allows a customer to “lease” a vehicle from a dealer. This is cheaper than buying the car outright and allows the customer to get all the advantages of driving a new vehicle. The leasing process usually involves the following steps:


Before you rent a new vehicle, it’s important to plan and decide how much you can afford. One of the main reasons for choosing to lease over buying is price, so it’s important to get this step right. Plan how much you can afford as a monthly payment and then factor in possible monthly insurance costs.

To make your estimate more accurate, you can use one of the many online car payment calculators. It may also be helpful to call an insurance agent and get a quote based on your age, location and driving history.


Once you have a rough estimate of your budget, you can start vehicle shopping. Before you go to the dealer, call and ask if they offer rental options. Not all of them, and confirming this information can save you a lot of time.

Once you’ve found a dealer that offers leasing options, take a look at the vehicle in person. Take a few test drives to make sure the vehicle meets your needs.


Once you’ve found a car you like, you can start negotiating the price. If you have to apply for a car loan, the dealer will assess your credit score and debt-to-income ratio to make sure you can make payments.

It is important to remember that you can negotiate the terms of your lease with the dealer. Make sure you talk to multiple dealers so you can find your ideal monthly rate.

Another thing to consider is the eventual purchase. Many dealers offer customers the option of buying the car at the end of the lease. If you want this option, make sure the dealer offers it. If your application is approved, you can leave the dealership with your new lease.

Your representative will create a contract outlining the terms of the lease, including the monthly payment, down payment, interest rate, purchase fee (if any), and other related costs. Review each part of the contract before signing to make sure it meets the terms you agreed to.


The first payment you make is the down payment, which is made the day you sign the contract. Each month thereafter, you must make the payments specified in your rental agreement. As mentioned, leasing generally allows you to make smaller payments than if you bought the car outright.

While these payments are lower, you will have to pay for all costs associated with driving the vehicle, including insurance and trips to the mechanic. Make these payments on time to meet the terms of your lease.

End of Lease

Once your lease is over, it’s time to return the car to the dealer. Make sure the vehicle is in excellent condition, as you will most likely have to cover any damages that occurred while you were in possession of the car.

If you set your purchase options when you sign the contract, you will have the option to buy the car at the agreed price and enjoy your ride for years to come.

What Credit Score Do You Need to Rent a Car?

You must undergo a credit check before being eligible to rent a vehicle. The minimum credit score required to qualify for a loan will vary by dealer, but most look for a minimum score of 661.

This is on the low end, and many dealers are looking for a score of 700 and above, according Experian’s State of the Auto Finance Market Q2 2022. This report shows the majority of rental customers have a score of 741 or above. This means most dealers look for a higher credit score when renting than they do for purchases.

Although these rules apply broadly, the approach to leasing is different for all dealers. It is important to check with various local car dealers to find one that will agree to rent you a vehicle. Some may even specialize in helping customers with bad credit obtain car loans, although this can come with additional drawbacks.

What Should You Consider When Renting a Car with Bad Credit?

If your credit score is subprime or close to crossing the line, you’ll have to jump through a few extra hoops to rent a car. The most common challenge you will face is higher prices. This may include a larger down payment, higher monthly payments, or increased financing costs.

Also called the money factor, this financing fee is similar to the interest paid on a loan and is based on a credit score. If you’re facing rising costs, measure them against your monthly budget to make sure you can still make payments reliably.

Another pitfall you may run into is “hire-here pay-here” dealers. These companies specialize in offering leasing options to customers with low credit scores. If you are having trouble finding suitable leasing arrangements, this offer may seem tempting.

Unfortunately, they often come with fewer choices and some drawbacks. In many cases, the cars available will be older and the rates higher. This can cause you to pay more for a car that is not worth the cost.

How to Increase Your Credit Score before Renting a Car

In most cases, your best option when faced with a bad credit history is to improve your credit score. While this can take a while, it pays off in the long run, allowing you to get the car you want at a fair price. These are some easy steps you can take to improve your credit score to prepare for a car loan:

Pay Bills On Time

This is one of the most important and obvious ways to improve your credit score. If you use a credit card frequently, pay off the balance or make the minimum payment every month.

It also doesn’t hurt to make sure you pay your other bills, like rent, on time. It can also help improve your debt-to-income ratio, another factor that affects your credit score.

Monitor Your Credit

See if the bank you use offers a credit score check that won’t affect your score. Use it to monitor your credit health and make necessary adjustments.

It may also be helpful to sign up for a credit monitoring service. These services can help prevent fraud, which may result in a low credit score.

Consider Loans

Some lenders offer credit building loans to customers with low credit scores. These loans consist of a lump sum that you can use to pay off debts and increase your score.

The interest is low and allows you to show creditors that you can manage your debt effectively. Before you take out a loan, remember that you will be taking on more debt and paying interest on what you borrow.

How to Increase Your Chances of Approval with Bad Loans

If you decide to rent without improving your credit, you can take a few steps to increase your chances of being approved for a car loan:

Consider a Lease Takeover

Rental takeover allows you to drive a car that is already rented by another driver. This arrangement is also called a lease transfer or lease swap.

This may be a good option if you and your dealer can find other drivers willing to give up the rest of their lease. You will make monthly payments and have access to the car until the agreed-upon lease ends.

Rental transfers have some drawbacks. First, you’ll only have access to the vehicle for the remainder of the lease, which may be shorter than you expect. Second, you may have to pay additional fees associated with the transfer process. Finally, make sure the car is in good condition to avoid paying for damages that other drivers may have caused.

Find Co-Signers

If you’re having trouble finding approval, it may be helpful to get a co-signer. This is the second individual, often a spouse or relative in good standing. Having a co-signer splits the responsibility for the lease and gives the dealer a backup if you can’t make the payments.

It’s important to note that failure to pay can also damage the signer’s credit, so make sure they understand the situation.

What Are the Alternatives?

If you’ve gone through all the options and can’t get approved, you still have other options. The best is probably to buy a used car. Buying used offers the advantage of lower monthly payments, and the approval process will be easier.

This can help you save money that might be better spent elsewhere. Whatever you choose, be sure to maintain a good credit score so you have more options in the future.

Taking all these factors into account, it’s clear that renting a car with bad credit can be challenging, tiring, and sometimes impossible. In most cases, your best option is to wait until you improve your credit score.

This will allow you to rent the car you want at a price you can afford. It will also help you avoid wasting money that is better spent elsewhere. Good luck on your leasing journey!

Headshot of Elizabeth Rivelli

Finance & Insurance Editor

Elizabeth Rivelli is a freelance writer with over three years experience in finance and personal insurance. He has extensive knowledge of various lines of insurance, including auto insurance and property insurance. His byline has appeared in dozens of online financial publications, such as The Balance, Investopedia,, Forbes and Bankrate.

Leave a Reply