After bankruptcy, getting financing for anything can be a challenge, because bankruptcy drops your credit score. Larger loans like those associated with vehicles are particularly difficult to get. You may have to work harder to get a lease following bankruptcy than if you never had filed, but your bankruptcy should not prevent you from getting a vehicle.
Regardless of whether you lease or buy a car, dealers look for specific factors when you apply for financing. They look at your credit history, credit score, your debt-to-income ratio and possibly your employment status. In other words, they assess your ability to pay the lease.
Some dealers see opportunity in people with bankruptcy and poor credit. These lenders offer "second-chance" leases because they can make excellent profit from charging you higher rates of interest. This means that your ability to get a lease after bankruptcy is based largely on which lender you approach.
Bankruptcy stays on your credit report for up to 10 years, but this does not mean you cannot get financing sooner. Many auto lenders will give you a lease, provided you have clear evidence such as bank statements and pay stubs that verify you are financially rehabilitated. Some people qualify for financing in as little as two years following bankruptcy, depending on how consistent they are with payments and what steps they take to clean up other areas of their credit report. Additionally, the amount of a lease is almost always less than the amount of an auto purchase loan. Therefore, some lenders see you as less of a risk and will approve a lease with a bankruptcy before they'll approve a purchase loan.
Whether you can get a lease after a bankruptcy depends on the lender; shopping around is necessary to get the best interest rate. You may have better luck if you wait a while so you can build up your credit score and history. Even though you might have to do some research to find a good deal, you'll probably have an easier time getting a lease than a purchase loan after bankruptcy, simply because lease amounts are less than purchase amounts. You pose less risk to the lender.
Wanda Thibodeaux is a freelance writer and editor based in Eagan, Minn. She has been published in both print and Web publications and has written on everything from fly fishing to parenting. She currently works through her business website, Takingdictation.com, which functions globally and welcomes new clients.