HOW BAD CREDIT WORKS WITH AN AUTO LEASE
1,188In this video, I discuss what your credit score translates to when calculating a car lease.
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Just like an auto loan has an APR, a car lease has a Money Factor. The Money Factor on an auto lease is the same thing as a Interest Rate or APR on an auto loan. The difference is, most auto loans can be shopped around to a wide variety of banks. With most auto leases, with the exception of a few independent lease companies, you are tied into whatever the Manufacturers Bank (ie, Nissan NMAC, VW Credit, GM Financial) states that the Interest Rate or Money Factor is for that auto lease.
Keep in mind the following:
Usually anything below a 650 Credit Score is considered Tier 6-9. This typically adds between 5-8% APR to your standard Money Factor.
For example, if the standard Money Factor available for those with a 720+ Credit Score is 1% APR, your APR or Money Factor will be 5-8% higher.
In leasing, this is what that would actually look like:
Tier One Money Factor: .0005
Tier 6 Money Factor Adder: .00165
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Final Money Factor: .00170 or 4% APR
It is usually much higher on Tier 7 or 8, or basically close to a 600 or less credit score.