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How long after bankruptcy can I lease a car?

How long after bankruptcy can I lease a car?

Once you have been discharged from your bankruptcy, any restrictions placed upon you should be lifted and you are free to start again financially.

However, this debt solution will have had a severe impact on your credit rating, affecting your ability to borrow.

This includes leasing a car, as doing so requires you to make monthly payments to cover the cost of the rental, and a credit check will need to be performed.

How long after bankruptcy can a car be leased?

There is no set time limit on when you can apply for credit again after bankruptcy – such as on a leasing deal or car finance product. However, it’s very unlikely you will be accepted soon after you have been discharged.

If you are also making bankruptcy payments via an Income Payment Agreement (IPA), you will find it difficult to keep up these payments and lease a car too. An IPA can last for up to three years and so may continue after your discharge date.

Your bankruptcy will remain on your credit report for six years from the date it was created and so will be seen by future creditors when you make an application, even if you have been discharged.

Within the first year, your credit rating won’t have had much time to recover and so you should perhaps avoid applying for a lease deal in this time. Remember, too, that rejected credit applications can damage your rating further.

Even if your credit rating has improved, it’s a good idea to bear in mind that some leasing companies may ask if you have ever been made bankrupt when you apply. You must answer this truthfully and it could mean your application for a leasing deal is automatically rejected.

How to increase your chances of getting accepted for leasing a car

After bankruptcy, it’s important you take your time when building your credit rating again. It may feel like you are starting from scratch, but you can get things back to how they once were.

Here are a few things you can do to start making improvements to your credit rating:

  1. Ensure you are registered on the electoral roll – Credit reference agencies and lenders use this to confirm your current address, and if this is incorrect it can impact your credit rating further.
  2. Check your credit report – Ensure all of the information is correct on your credit report. If there are any errors, these may be negatively impacting your rating.
  3. Ensure the bankruptcy has been noted as discharged – Double check on your credit report that the bankruptcy is considered completed. This means your rating can start to recover.

We have further information on how to improve your credit rating here – this can help increase your chances of being accepted when applying for credit products.

You could also speak to the leasing company you want to deal with. There are no guarantees but they may be able to help when it comes to setting up a credit agreement, although this probably means paying a higher interest rate or payment over time to cover the risk.

Speaking to them directly and attempting to come to an agreement could help you to be taken seriously as you attempt to prove that you are competent at managing money. It’s also worth discussing your options with more than one lender so you can compare and get the very best deal to benefit you.

What to consider when leasing a car after bankruptcy

If you do get accepted for a leasing deal, it’s important you only take this on if you feel confident that you can make the repayments.

Factor these payments into your monthly budget and ensure there is also a small buffer of disposable income still available to ensure you can cover costs if you come across an emergency expense.

Keep a close eye on the interest rate and find out from the lender whether or not this could increase in the future. This is something you will need to think about and factor for to avoid falling into debt again.

Ready to start borrowing again, after bankruptcy? Speak to a member of our team at PayPlan first about your situation and how to go about this sensibly. They can be reached on 0800 316 1833  or via our contact form on the site.

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