Recent Bankruptcy and Auto Leasing

Recent Bankruptcy Alone Won’t Necessarily Block an Auto Lease

After filing for bankruptcy, many consumers find themselves in a position where they want or need to apply for an auto lease. These consumers are often concerned with the impact their recent bankruptcy will have on their ability to lease. How willing are auto leasing agencies to lease cars to customers who have recently filed for bankruptcy? Many consumers overestimate the impact of their recent bankruptcy on a car company approving their auto lease.

If you have recently filed for bankruptcy, your auto leasing company will take into consideration the fact that you will not be able to file for bankruptcy again during the term of your lease agreement. As far as they’re concerned, the fact that you have recently filed for bankruptcy eliminates the possibility that you might file at some point during your lease. This is not necessarily bad for your approval chances!

Approved Auto Leases Examine Income and Post-Bankruptcy Credit History

When deciding whether to approve or decline the auto lease of a recently bankrupt customer, most auto companies will not categorically reject an applicant because of a recent bankruptcy. They will, however, expect the applicant to demonstrate two qualities in the aftermath of a recent bankruptcy.

The first issue that auto leasing companies consider is whether the applicant makes enough money to afford the conditions of the lease. The applicant must demonstrate that he or she can afford monthly payments according to the proposed terms of the auto lease. This is usually demonstrated through income and employment history.

The second, and more important, quality of interest to auto leasing companies is credit history. While a consumer’s credit report will show a recent bankruptcy, auto leasing companies pay critical attention to the credit history built by an applicant immediately following the bankruptcy. If the applicant’s credit report shows that he or she has been making timely payments since the bankruptcy, an auto leasing company will have more incentive to approve the lease.

How to Increase Chances of Securing an Auto Lease after Recent Bankruptcy

It is recommended that consumers who have recently filed for bankruptcy rebuild their credit history as soon as possible. Rebuilding credit history after a recent bankruptcy can help a consumer apply for a variety of loans, such as auto leases. Apply for one or possibly two credit cards, even if they are high- interest accounts or secured cards.

Make at least one transaction on each card per month (even if you are only buying a gallon of milk!), and pay the balance in full at the end of each month. If at the end of the month you are unable to pay the balance in full, stop using the card immediately! Make no further charges to the account until you have paid the balance in full. The sooner you build a history of timely payments on these accounts, the sooner auto companies will be likely to approve your application for an auto lease following a recent bankruptcy.