Can I lease a car with bad credit?

Possibly. Business contract hire funders each make their own credit decision, so a poor credit history does not automatically rule you out, but it can limit your options or change the terms. Nothing can be promised until a funder has assessed your application.

The detail

Contract hire is a way of paying to use a vehicle for a fixed period without owning it. We deal in business contract hire, so the customer is a business: a limited company, LLP, partnership or sole trader. The funder is the finance company that owns the vehicle. We are a credit broker, not a lender, and we do not make the credit decision.

What a funder looks at depends on the type of business:

• Limited companies and LLPs. The funder usually looks mainly at the company's own credit file and accounts. Directors' personal credit may also be checked, especially for newer or smaller companies.
• Sole traders and partnerships. The business and the individual are legally the same, so your personal credit history is normally central to the decision.

Funders differ in how they treat things such as missed payments, defaults, county court judgments or a very thin credit file. Some will not proceed. Others may offer terms that reflect the extra risk. These are the common adjustments, and none is certain:

• a larger initial rental
• personal backing from a director
• a shorter or different contract length
• a different vehicle, often one with a lower cost
• supporting information such as recent accounts or bank statements

Every application leaves a mark on your credit file, so it is sensible to check your own file first and fix any errors. Applying to many funders yourself in a short time can look worse than applying through a broker, who can match the enquiry to funders more likely to consider your circumstances.

A worked example

Take a sole trader who runs a small landscaping business and needs a van. A couple of years ago they missed some payments on a personal loan, and this now appears on their credit file. Their business has been trading steadily since.

A broker would first ask about the business: how long it has traded, what the van is for, and what income is coming in. They would also ask about the credit history in plain terms, so nothing surprises the funder later.

With that information the broker can approach funders that may take a more flexible view of a past problem that has since been put right. Each funder then decides for itself. One might decline. Another might ask for a bigger initial payment or a guarantor. A third might offer terms close to a standard application. It is also possible that none will proceed. The point of the example is that the outcome depends on the funder and the details, not on a single credit score.

Related questions

If you are weighing this up, it can help to look at a few connected topics: how a limited company's credit file differs from a director's personal one, what personal backing from a director involves, how contract hire compares with other ways of getting a vehicle, and how to check and correct your credit file before applying.

Questions people ask

Will a missed payment or default stop me leasing a vehicle?

Not necessarily. Funders weigh the type, size and age of the issue alongside the strength of the business, and some are more flexible than others. Any decision rests with the funder.

Does checking my eligibility affect my credit file?

It depends on the type of check. A soft search does not leave a visible mark for other lenders, whereas a full application usually does. Ask which will be used before you proceed.

Can a director's personal credit history affect a company application?

Yes, it can. Funders often consider the directors' personal credit as well as the company's, particularly where the company is new or small, and may ask for personal backing from a director.

Can I improve my chances before applying?

You can check your credit file for mistakes, keep payments up to date, and have recent accounts or bank statements ready. These steps may help, but they do not ensure a funder will accept an application.