Car Leasing vs Car Finance: Which Is Right for You?
Published 28 May 2025
Accessing finance to purchase or lease a vehicle can be challenging, especially for individuals with bad credit. Lenders often see those with poor credit histories as higher risk, which can limit borrowing options or increase costs. However, whether you’re considering car leasing or more traditional car finance, options are available—even if your credit score isn’t perfect.
In this guide, we’ll explain the difference between car leasing and car finance, help you decide which option is best for your financial situation and lifestyle, and cover how bad credit affects your choices and how to improve your chances of approval.
What Is Car Leasing?
Car leasing allows you to drive a car for a fixed term—usually two to four years—by making monthly payments, without the intention of ownership at the end of the agreement. Instead of borrowing money to buy the car outright, you pay for the use of the vehicle and return it to the leasing company when the contract ends. This approach is popular for those seeking lower monthly costs and the flexibility to change cars regularly.
What Is Car Finance?
Car finance typically refers to agreements where you borrow money to purchase a vehicle, with the aim of owning it after all payments are complete. Common types include:
- Hire Purchase (HP): You hire the car and own it after the final payment.
- Personal Contract Purchase (PCP): Lower monthly payments with an option to buy at the end.
- Personal Loans: Borrow a lump sum to buy the car outright.
With these options, you usually own the car at the end (except PCP if you choose not to buy), but monthly payments and upfront costs tend to be higher than with leasing.
Can I Get Car Finance or Leasing with Bad Credit?
Yes! While bad credit can make approval more difficult and increase interest rates or fees, it is still possible to get car finance or lease a vehicle. Specialist lenders, like CVS, work with customers who have poor credit histories and offer tailored solutions.
How Does Bad Credit Affect Your Car Finance or Leasing Options?
- Higher Interest Rates: Lenders charge more to offset risk.
- Larger Deposits: You may need to pay more upfront.
- Stricter Terms: Mileage limits on leases or shorter loan terms.
- Possible Rejections: Some lenders may decline applications.
How to Improve Your Chances of Approval
- Choose an Affordable Car: Lower loan amounts are easier to approve.
- Increase Your Deposit: A bigger upfront payment reduces lender risk.
- Use a Guarantor: Someone with good credit can co-sign your agreement.
- Check Your Credit Report: Fix any errors before applying.
- Make Timely Payments: Build your credit history over time.
Car Leasing vs Car Finance: Pros and Cons
| Feature | Car Leasing | Car Finance (HP, PCP, Loans) |
|---|---|---|
| Ownership | No ownership; return car at end | Own the car after final payment |
| Upfront Cost | Lower upfront deposit | Higher deposit or full payment |
| Monthly Payments | Fixed, often lower payments | Fixed, usually higher payments |
| Mileage Limits | Mileage caps with possible fees | No mileage restrictions |
| Maintenance | Often covered under warranty | Owner responsible after warranty expires |
| Depreciation Risk | No depreciation worries | You bear depreciation risk |
| Flexibility | Can lease a new car after term | Must sell or keep car after loan ends |
| Credit Impact | Can be harder with bad credit, but specialist options available | Can be harder with bad credit, but options exist |
Why Consider Car Leasing?
Leasing can be ideal if you want:
- Lower monthly payments and upfront costs.
- Predictable budgeting with fixed payments.
- To drive a new car every few years without the hassle of ownership.
- To avoid depreciation and resale concerns.
- Maintenance often included under warranty.
- Flexible end-of-term options (return, renew, or sometimes buy).
Some leasing companies, such as CVS, offer high mileage options and specialise in leasing for customers with bad credit, making it easier to get approved and find terms that suit your needs.
Why Consider Car Finance?
Car finance is better if you want:
- To own the car outright.
- Unlimited mileage with no restrictions.
- The freedom to modify or sell the car anytime.
- To build equity in your vehicle over time.
However, it usually requires higher monthly payments and a larger deposit.
Why Choose CVS for Bad Credit Car Leasing?
- Specialists in Bad Credit: Helping customers since 1999.
- Tailored Finance Solutions: Flexible agreements based on your budget and preferences.
- Soft Credit Checks: Pre-approval without impacting your credit score.
- High Mileage Options: Customisable terms for drivers who need more miles.
- Exceptional Service: Friendly, efficient, and stress-free experience.
- Fast Delivery: Even on weekends, so you can get on the road quickly.
Frequently Asked Questions (FAQ)
Q: Can I lease a car with bad credit?
A: Yes, specialist companies offer leasing options for bad credit customers, though terms may vary.
Q: Is leasing cheaper than financing?
A: Leasing often has lower monthly payments and upfront costs but you won’t own the car.
Q: What happens at the end of a lease?
A: You return the car, lease a new one, or sometimes buy the car for a pre-agreed price.
Q: Will leasing improve my credit score?
A: Making timely payments can help improve your credit over time.
Final Thoughts: Which Should You Choose?
If you want lower monthly payments, flexibility, and a new car every few years without ownership hassles, car leasing is a great option—even with bad credit. If you prefer to own your vehicle, drive unlimited miles, and build equity, car finance may be better.
Both options are viable with bad credit when working with specialist lenders. Assess your budget, driving habits, and long-term goals to decide which suits you best.
If you’d like personalised advice or a free quote, contact CVS today and let our experts help you get the car you want—regardless of your credit history.
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