Car Deal Canada

Leasing a Car With Bad Credit

Leasing a Car With Bad Credit

Having poor credit can feel like a hopeless barrier when it comes to leasing your dream car. With low credit scores typically leading to rejection or sky-high interest rates from most lenders, it’s easy to assume leasing with bad credit is impossible.

But here’s the good news – with the right strategy, you can still end up driving away in a new leased car, even with less-than-ideal credit.

This comprehensive guide will walk you through everything you need to know to lease a car in Canada when you have bad credit. We’ll cover how to check and improve your credit score, find subprime lenders willing to work with you, negotiate the best possible deal, leverage cosigners and down payments strategically, and weigh alternatives if leasing still doesn’t work out.

By the end, you’ll have all the information you need to make leasing with poor credit a smooth, financially-wise process. Let’s get started unlocking the open road, no matter what your credit report says.


Get Pre-Qualified in Under 60 Seconds

All Credit Approved and 0 Money Down Options Available


What Credit Score is Needed to Lease a Car in Canada?

When it comes to leasing a vehicle, your credit score plays a major role in determining your eligibility and the terms you can qualify for. In Canada, credit scores range from 300 to 900, with higher scores being ideal for leasing.

Here’s an overview of how different credit score ranges are viewed for auto leasing in Canada:


  • Scores below 620 are generally considered “poor credit” by most lenders
  • A score of 700 or above is ideal and will qualify you for the best possible lease terms
  • While 700+ is preferable, it’s still possible to get approved with scores in the mid 600s
  • Most leasing companies have minimum score requirements around 650

So if your credit score is below 620, you’ll have a harder time getting approved and will likely pay higher interest rates. But scores between 620-650 are workable, and anything above 650 will put you in a good position for leasing. The higher your score, the better off you’ll be.

It’s also about more than just your score alone. Lenders look at your full credit history and report, income, existing debts and more. But aiming for a credit score over 650 is a good baseline to improve your chances of leasing approval.


Pros of Leasing with Bad Credit

Leasing a vehicle when you have poor credit has some advantages that are worth considering:


Lower Monthly Payments Than Financing

One of the biggest pros of leasing with bad credit is that it usually results in a lower monthly payment compared to financing a vehicle purchase. When financing, your monthly payment has to cover the full purchase price plus interest charges. With leasing, you are only paying for the vehicle’s depreciation during the lease term, plus interest and fees.

This makes the monthly payments much more affordable, especially on newer luxury vehicles that tend to depreciate quickly in the first few years. Leasing can put you in a nicer vehicle for less per month.

Easier Approval Than Loans

Since leasing requires less money upfront and lower monthly payments, it’s often easier to get approved for a lease when you have bad credit versus a traditional auto loan. The bar for approval is a bit lower with leasing versus financing.

Lenders know they can repossess the vehicle more quickly in a lease default situation. This makes them more willing to work with consumers who have poor credit but can prove they have the income to handle the monthly payments.

Chance to Rebuild Your Credit

Making your lease payments consistently and on-time every month will help rebuild and improve your credit score over the term of the lease. This sets you up to qualify for better loan terms in the future when you are ready to finance your next vehicle purchase.

Just be sure to make every payment by the due date and keep your credit utilization low on other accounts. Successfully leasing and making timely payments can be an important step in recovering from past credit issues.


Cons to Consider When Leasing a Car with Bad Credit

While leasing a car can be a good option for those with poor credit, there are some potential drawbacks to be aware of:


Higher Interest Rates

One of the biggest cons of leasing with bad credit is that you will likely pay much higher interest rates than someone with good credit. Interest rates on a lease are based on credit scores, so the lower your score, the higher your rate will be.

For prime borrowers with scores above 720, interest rates on a lease typically range from 0% to 4%. But for subprime borrowers with scores below 620, rates can be from 15% to 20% or even higher at some dealerships.

These high interest rates can significantly increase the monthly payments on your lease. You’ll end up paying a lot more over the lease term just in interest charges alone.

Larger Down Payment Required

In addition to higher monthly payments, most lenders will require a larger down payment when leasing with poor credit. While someone with good credit may put $0 or just first month’s payment down, you may need 10% to 20% down or even more.

This larger cash requirement upfront makes leasing more challenging for those with bad credit. You’ll have to save up enough money for the down payment before you can get approved.


Early Termination Fees

If your financial situation changes during the lease and you need to end it early, you’ll face hefty early termination fees. These fees are typically several thousand dollars and are designed to reimburse the lessor for the remaining payments.

For those with bad credit already on a tight budget, these termination fees can make getting out of a lease very difficult. Make sure you can afford the full length of the lease term before signing.


Improving Your Credit Score Before Applying

If your credit score is on the low side, taking steps to improve it before applying for a lease can significantly increase your chances of getting approved and securing better terms. Here are some tips for boosting your credit score:


Pay All Bills On Time

Payment history makes up a significant portion of your credit score. Simply making on-time payments for all your bills and debts will raise your score over time. Set up autopay or calendar reminders so you never miss a payment deadline.


Pay Down Debts

High balances and high credit utilization (using a large percentage of your total available credit) hurts your score. Pay down credit card, loan, and other balances to lower your credit utilization. Getting balances below 30% of the limit can help.


Check Credit Reports for Errors

Errors on your credit reports like incorrect late payments or loan amounts can unfairly lower your score. Review your credit reports from Equifax and TransUnion and dispute any errors you find.


Use Secured Credit Card Responsibly

Secured cards require a deposit but are easier to qualify for with bad credit. Using one responsibly by keeping balances low and making all payments on time can quickly boost your score.


Finding a Lender Willing to Work with Bad Credit

When trying to lease a vehicle with poor credit, one of the keys is finding a lender that is willing to work with subprime applicants. Here are some options to consider:


Subprime Lenders

Specialized subprime lenders can be a good option when you have bad credit. These lenders specifically cater to customers with credit scores below 640. They are used to dealing with unique credit situations and may be more flexible than traditional lenders when it comes to approval requirements. The trade-off is that interest rates from subprime lenders tend to be higher to offset the additional risk.


Shop Around for the Best Rates

Don’t just go with the first subprime lender you find. Take the time to shop around and compare interest rates and terms from multiple providers. Even a small difference in APR can add up to thousands over the course of a lease. Look for lenders willing to work with your specific credit situation to find the most competitive offer.


Consider Lease Brokers

A lease broker can be helpful for finding lenders willing to work with bad credit. Brokers have relationships with many lenders, allowing them to shop for the best terms on your behalf. Make sure to ask about any broker fees upfront so they don’t eat into your savings. A broker with expertise in bad credit situations can match you with a lender tailored to your unique needs.


Strategies to Get Approved with Poor Credit

Getting approved to lease with bad credit in Canada is possible if you employ some smart strategies. Here are some of the most effective ways to boost your chances of leasing approval despite having poor credit:


Have Steady Income

Lenders want to see that you have a reliable source of income in order to make the monthly payments. Provide recent pay stubs and bank statements showing regular direct deposits from your employer. Having steady verifiable income can help offset negatives on your credit report.


Put Down a Larger Down Payment

Most leases require some sort of down payment, usually between $1,000-$4,000 for lessees with good credit. But with poor credit, putting down 10-20% or more can demonstrate your commitment and ability to afford the lease. A larger down payment requirement may also lead to lower monthly payments.


Use a Cosigner with Good Credit

Adding a cosigner with a strong credit history can drastically improve your chances of getting approved. Their good credit essentially counters your bad credit. Just note that they will be equally responsible for the lease payments if you default.


Negotiate for Better Terms

Don’t just accept the first lease terms you are offered if they seem unreasonable. Negotiate respectfully with the dealer for a lower interest rate, smaller down payment, or lower monthly payments. Come armed with data on average lease rates. Flexibility from the dealer can make a big difference.


Alternatives if Leasing Falls Through

If you have exhausted all options for leasing a vehicle but are still unable to get approved, don’t lose hope. You still have alternatives to get access to transportation without buying a new car.


Buy Used

Purchasing a used vehicle is often more attainable for those with poor credit. Since a used car costs less upfront, lenders may be willing to finance you when they won’t approve a lease. Shop around to find the most affordable used cars that fit your needs and budget.


Public Transportation

Public transit like buses, subways, and trains provide an affordable way to get around if leasing a vehicle isn’t possible. See if you live and work near public transit routes to rely on them for your daily commute and errands.


Ride Sharing

Services like Uber and Lyft can also fill transportation gaps when needed. While more expensive than public transit, ride sharing is there on demand 24/7. Use judiciously for occasional trips when you can’t drive yourself.


Borrow a Vehicle

Turn to your family and friends to borrow a car when required. Offer to cover gas or provide other favors in exchange for temporary use of their vehicle. Just be sure to detail guidelines for mileage and condition to avoid issues.


Case Studies

Real life examples provide helpful insight into leasing with bad credit. Here are a few case studies of people who successfully leased despite poor credit:


Sarah, 28, Calgary

Sarah had a credit score of 620 due to student loans and some missed credit card payments. She needed a reliable car for her new job but knew she wouldn’t qualify for prime lease rates. Sarah spent 6 months working to improve her score to 640. She got approved to lease a Honda Civic by putting $1,500 down and having her sister cosign the lease. Her payment was higher than average but doable. After a year of on-time payments, Sarah was able to refinance the lease in her own name at a better rate.


James, 33, Toronto

James had a bankruptcy on his record and a 550 credit score. But he had steady full-time employment for 3 years. James found a “lease here pay here” dealer willing to work with his credit situation. He leased a used Toyota Corolla with $2,000 down and his recent pay stubs as proof of income. His payment was high at $450 per month but he saw it as an opportunity to re-establish his credit.


Alicia, 42, Montreal

As a single mom, Alicia needed a minivan loan for her kids but had a bad credit score of 580. She worked with a lease broker who found her financing from a credit union. Alicia put $5,000 down to lower the monthly payment and her parents agreed to cosign. While not the ideal terms, she got approved and leased a Dodge Caravan. After 2 years of on-time payments, Alicia was able to get the lease refinanced without the cosigner.


Expert Tips

Here are some expert tips from finance professionals on leasing a car with bad credit in Canada:


1. Check your credit report

Before applying to lease, order a free copy of your credit report to understand exactly what is impacting your score. Look for any errors that you can dispute to improve your rating. Knowing your credit status will help you set realistic expectations.


2. Have a down payment ready

Most lenders will require a larger down payment for applicants with lower credit scores. Have at least $1,500 – $2,000 available for the down payment to improve your chances of getting approved and lower the monthly payments.


3. Consider a co-signer

Adding a co-signer with good credit can make it much easier to get approved and help you qualify for lower interest rates. Just make sure the co-signer understands they are equally responsible for making payments.


4. Shop around with multiple lenders

Don’t just apply with one lender – shop around and compare lease terms and rates. Subprime lenders may offer better terms than traditional financing sources for those with poor credit.


5. Negotiate for the best deal

Look for opportunities to negotiate a better deal, such as waiving down payment or acquisition fees. Be ready to walk away if you can’t get reasonable terms.


Financial Assistance Programs

If you are struggling with bad credit and need transportation, there may be some financial assistance programs available to help you lease a vehicle. Some options to explore include:


Government Programs

Certain government agencies offer car loan and lease assistance programs for low income individuals or those with credit challenges. These can include down payment assistance grants, subsidized lease rates, or guaranteed loan approvals. Examples of programs by province include:


  • Ontario – The Ontario Disability Support Program Vehicle Modification Program can help cover costs of necessary vehicle modifications for those with disabilities.
  • Quebec – The Social Solidarity Program provides last-resort financial assistance which could potentially help with auto lease payments in certain cases.
  • Alberta – The Alberta Works Income Support program provides living allowances which recipients could put towards a car lease payment.
  • B.C. – The Homelessness Outreach Program offers transitional housing support that may assist with auto lease payments for those at risk of homelessness.


Non-Profit Organizations

Some non-profit groups offer financial assistance for transportation needs. For example:


  • The Catherine Donnelly Foundation provides an inclusive mobility program that can subsidize the cost of accessible vehicle leases for those with severe disabilities.
  • Good Shepherd Centres helps provide affordable leased vehicles to single mothers struggling with finances.
  • The Dream Fund by the Canadian Automobile Association awards grants to help youth get driving which could subsidize lease down payments.

Check if organizations in your local area offer similar lease financial assistance programs. These options can make getting an auto lease more feasible for those with credit challenges or low incomes.


Get Approved Today

See if you qualify in under 60 seconds

Questions About Bad Credit Car Leasing

Yes, you can lease a car in Canada even if you have bad credit. However, you’ll likely need to put down a larger down payment, possibly have a co-signer with good credit, and expect higher interest rates. Make sure to shop around to different dealerships, as some may be more willing to work with bad credit than others.

Most car dealerships in Canada require a minimum credit score between 600-650 to be approved for a car lease. The higher your score, the better lease terms and interest rates you’ll qualify for. Anything below 600 and it becomes difficult to get approved without a co-signer or large down payment.


Pay all your bills on time, keep credit card balances low, dispute any errors on your credit report, don’t apply for too much new credit at once, and consider getting a secured credit card if you don’t already have one. Give yourself at least 6 months to improve your score before trying to lease.

When leasing in Canada, you’ll need your driver’s license, proof of insurance, proof of income (recent pay stubs), proof of address (utility bill), a void cheque for payments, references, and possibly a co-signer if you have poor credit.

Putting down a down payment when leasing can lower your monthly payments and interest rate. Aim for at least 10-20% down if possible. With bad credit, you may need to put down 25-50% or more to get approved without a co-signer.


With bad credit, expect lease rates around 8-15% in Canada depending on the lender, your specific credit situation, down payment, etc. This is quite a bit higher than the 3-5% rates offered to those with good credit.


Some dealerships known for working with bad credit in Canada include Good Fellow’s Auto Depot, Car Nation Canada, Auto Credit Express, 321 Auto Credit, and These places cater specifically to bad credit customers.


If your credit is poor, leasing may be easier to get approved for than financing. However, leasing comes with mileage limits and you won’t own the car in the end. Weigh the pros and cons of each option carefully based on your budget and needs.

Opt for a smaller, more affordable car model, choose a shorter lease term (e.g. 2 years instead of 3), put more money down, lease a used vehicle instead of new, negotiate the best price and interest rate, and waive unnecessary extras like gap insurance to reduce the cost.

As of 2023, current average lease rates from mainstream dealers in Canada tend to range between 3-7% for applicants with good credit. Those with poor credit can expect to pay 8-15% or more when leasing a vehicle.

The cheapest way is to put down as large of a down payment as possible (25% or more) and choose an affordable, lower-end model that qualifies for good promotional lease offers. Negotiating the price and shopping around between dealerships can further reduce costs.

It is possible but very difficult to get a $0 down car lease in Canada if you have bad credit. Most dealers will require at least some down payment, or a co-signer with good credit to approve a no money down lease to those with poor credit.

Average monthly lease payments in Canada tend to range between $300-600 based on the vehicle’s sticker price, whether it’s new/used, lease term length, interest rate, down payment, etc. More expensive luxury cars exceed $1000 per month on average when leased.

You need to be at least 18 years old in most provinces, 19 in Manitoba and Alberta, and 21 in Ontario to enter into a legal car lease contract in Canada. Additionally, some lease providers impose extra underage fees for applicants under 25 years old.

Yes, many dealerships in Canada offer used car leasing options in addition to new vehicles. Used car lease terms tend to be shorter (2-3 years), interest rates can be higher, and vehicle condition standards are strict when returning the leased car.



Typical yearly mileage limits allow between 12,000-20,000 km when leasing a car in Canada. Going over causes expensive per-kilometer overage fees around $0.10-0.25/km. Carefully consider your driving needs before agreeing to a low mileage lease.

You must immediately inform the leasing provider. As long as you have lease-end protection coverage, extra fees may be waived depending on the situation. Otherwise you’ll pay the collision deductible plus fees to repair damages exceeding regular wear & tear when returning the car.

You can try to end your auto lease early in Canada but will face hefty early termination fees, usually equivalent to a few remaining monthly payments. It’s often better to try selling or trading in the leased car instead of outright breaking the contract.

Get Approved Today

See if you qualify in under 60 seconds