How Credit Score Affects Rent-to-Own Car Finance

Car Finance
April 28th, 2025
How Credit Score Affects Rent-to-Own Car Finance

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When you want to get rent-to-own car finance, your credit score matters a lot. Some people think rent-to-own is an easy way to get a new car, even if they have poor credit. However, lenders will still look at your credit history. They use this info to decide the terms of your deal.

Knowing how your credit score impacts your options can assist you in finding the best financing solution. This knowledge can make you feel more sure about your choices.

What is a Credit Score?

A credit score is a number based on your credit file. This score shows lenders how well you pay back money you owe. In the UK, important agencies like Experian, Equifax, and TransUnion create your score.

A good credit score means you are a safer choice for lenders. A poor credit score can lead to higher interest rates and harder terms.

Credit Score Range Rating Impact on Rent-to-Own
881–960 Good Easier approval, better terms
721–880 Fair Approval possible, slightly higher costs
561–720 Poor Harder approval, higher repayments
0–560 Very Poor Very limited offers, may need guarantor

Source: Experian UK Credit Score Guide 2025.

How a Credit Score Impacts Rent-to-Own Car Finance

  • Credit Check: Most rent-to-own lenders do a soft credit check. This means applying will not lower your score immediately.
  • Monthly Payment: A lower score can lead to higher monthly payments. This is to help protect the lender’s risk.
  • Interest Rate: Applicants with late payments, defaults, CCJs, or debt management plans usually have to pay a higher interest rate.
  • Affordability: Lenders check your income, expenses, and repayment history. They want to make sure you can repay over a period of time.
  • Type of Vehicles: Some companies may have a limited choice. They often focus on a used car instead of a wide range of vehicles.

Fact: The Financial Conduct Authority (FCA) states that about 30% of UK applicants seeking car finance have missed payments or defaults on their credit report.

How Poor Credit Affects Your Rent-to-Own Deal

If you have bad credit or a poor credit history, here’s what usually happens:

  • Higher Weekly Costs: A car lease can cost more each week due to the risks involved.
  • Guarantor May Be Needed: Some companies may ask for a guarantor if your credit history isn’t strong.
  • Limited Options: You might have fewer choices when looking for a car, usually just used car models.
  • Stricter Terms: There can be limits on how much you can drive or extra fees if you return the car early.

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How to Improve Your Chances Before Applying

Improving your credit file can help you get better rent-to-own deals.

  • Get a Copy of Your Credit Report: Check for mistakes that could harm your credit rating. You can get a free copy through UK agencies.
  • Clear Small Debts: Pay off small debts before you apply. This can help your affordability.
  • Avoid New Credit: When you apply for new credit, it can lower your credit score for a short time.
  • Stay Within Budget: Pick a car lease plan that fits your monthly payment. This way, you can avoid defaults.

Fact: If you miss payments, they will stay on your credit file for six years. Keeping up with your repayments can help to improve your score over time.

Rent-to-Own vs Traditional Car Leasing for Bad Credit

Feature Rent-to-Own Traditional Leasing
Credit Check Soft Hard
Ownership Option Yes No
Early Termination Flexibility High Low
Road Tax Included Often Sometimes
Ideal for Bad Credit Yes Rarely

Example of How Credit Score Affects Rent-to-Own Repayments

Credit Score Range Typical Weekly Payment for Ford Fiesta 1.0 Typical Interest Rate (APR) Notes
Good (881–960) From £45 per week Around 8.9% Representative APR Likely approved easily with access to more vehicle options. Lower interest and smoother process.
Fair to Poor (561–720) From £60–£65 per week Around 14.9%–19.9% APR Approval still likely but with higher weekly payments and fewer car choices. May pay more over the full term.
Very Poor (Below 560) From £70–£80 per week 19.9%+ APR or guarantor needed May require a guarantor or bigger deposit. Limited range of used cars available on rent-to-own finance.
  • People with good credit have more options for vehicles and pay less money overall.
  • Those with poor credit may have to pay more each week because lenders view them as a risk.
  • Very poor credit often means stricter rules, such as needing a guarantor, making a larger down payment, or agreeing to a bigger final payment at the end of the period.

Disclaimer:
The numbers are up-to-date as of 09/04/2025. Your weekly payments, APR rates, and if you qualify depend on your credit history, income verification, and what the dealer offers. Always verify the recent terms with your finance company.

Tips for First-Time Applicants with Bad Credit

  • Choose Companies with Fair Lending Policies: Pick providers that truly care about customer satisfaction. They are less likely to use unfair terms.
  • Look for Deals Without Big Upfront Costs: You can find rent-to-own options that need low or no deposits.
  • Ask About Hidden Costs: Always check for road tax, MOT fees, servicing costs, and fees at the end of the period.

Tips for First-Time Applicants with Bad Credit

FAQs About Credit Scores and Rent-to-Own Car Finance

Can I get a rent-to-own car with a CCJ or default?

Yes, you might have to handle higher interest rates or look for a guarantor. Some companies work to help people with bad credit apply.

Does rent-to-own car finance check my full credit history?

Rent-to-own providers usually perform a gentle credit check. They care more about if you can pay back what you owe rather than just checking your credit score.

Will renting-to-own help improve my credit score?

Making payments regularly and on time can help improve your credit over the long term. This only works if the finance company shares your payment information with credit agencies.

How long should I wait after late payments before applying?

It’s smart to wait for at least three to six months of regular payments before you apply. This will show lenders that you are making better choices with your money.

How does a debt management plan affect my rent-to-own application?

If you are in a debt management plan, it could impact your rent-to-own options. Some lenders view this as a sign of poor credit. Even so, you can still get approved if you can show that you can afford it and that you have been making repayments for a period of time.

Can I apply for rent-to-own car finance while repairing my credit file?

Many people apply while they are working on their credit file. If you can pass the affordability checks and make your regular payments, some finance companies may still accept your application.

Is a guarantor always needed for poor credit applicants?

A guarantor is not always necessary. If you have bad credit, recent defaults, or a CCJ, you might need one. However, many rent-to-own companies offer plans for people with bad credit. These plans do not need a guarantor.

What happens if I miss a monthly payment on a rent-to-own deal?

Missing a monthly payment can lower your credit rating. It can also lead to late payment fees. Some companies might offer a brief grace period. Still, if you keep making late payments, it could end your contract early or greatly harm your credit score.

Does rent-to-own affect my future ability to get a car loan or lease?

Yes, that’s true — as long as you always make your repayments on time. A good rent-to-own agreement can help you rebuild your credit history. It shows lenders that you can handle financing well over a long term.

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