If you can’t qualify for traditional car financing, a rent-to-own car could be an option. These programmes can be helpful if you need dependable transportation for your job, your family or to run errands.
Rent-to-own car programmes let you lease a car while making payments towards eventually owning the vehicle. But before you jump in headfirst, it’s important to understand how rent-to-own car programmes work and know what to look for.
What the Agreement Actually Says
Rent-to-own car contracts are different from traditional financing agreements or buying a vehicle outright. Rather than paying off the entire price of the vehicle, you agree to pay an amount on a set schedule. Rent-to-own car contracts can include:
- The cost of the rental and how often payments are due
- The amount of time you’ll be paying
- Upfront fees, which may include a deposit, a delivery fee and an establishment fee
- Who’s responsible for maintenance and vehicle insurance
- Limitations on use or mileage
- What happens if you miss a payment
- How much it will cost to own the car
Depending on the terms of the contract, the vehicle may automatically be yours when you make your final payment. In other situations, there may be a final payment to purchase the car, or you’ll need to fulfil certain requirements of the contract before the car is yours. Don’t make any assumptions about how or if you’ll be able to own the car, and pay particular attention to that section of the contract.
Why People Consider This Route
Rent-to-own programmes may be an option if you don’t have much in the way of savings to make a down payment on a vehicle, your credit isn’t where it needs to be to qualify for a loan, or you don’t meet other qualification requirements. These programmes can also appeal because they’re typically structured with weekly payments, which are less than the cost of a car payment.
Qualifying for a rent-to-own car programme is often easier than traditional financing, but don’t expect to skip identity, address, income or driver’s licence verification. Companies want to make sure the terms of the contract are fair to both of you, after all. Toybrids is one provider operating in this part of the vehicle market.
If your car isn’t what you’d call dependable, a rent-to-own programme may make sense. After all, it’s expensive to miss work, doctor’s appointments or pick up the kids from school when your car won’t run.
Look Past the Weekly Payment
While a rent-to-own car may seem like a steal with its low weekly payment, the cost of the programme may be considerably higher than the actual price of the car. That doesn’t necessarily mean you shouldn’t consider a rent-to-own programme (https://www.lawinsider.com/dictionary/rent-to-own), but you should compare the total cost over the entire contract term before signing on the dotted line.
When you’re comparing the cost of the programme, request a breakdown that includes:
- Your initial deposit or first week’s rental payment
- The cost of each weekly or biweekly payment
- Administrative fees
- Insurance deductibles
- Maintenance costs are not covered under the programme.
- Late payment fees
- The cost to purchase the car at the end of the term (if applicable)
Be sure to ask if you’ll recoup any of the money you paid if you return the car before the end of the term. In most situations, the money you paid will not add up to anything you can take away, as they’ll simply be payments you made to drive the vehicle.
Check the Car Before You Commit
The condition of the car is important, too, and rent to own cars need the same careful inspection before handover. Before you drive a rent-to-own car off the lot, walk around it and make sure all dents, warning lights on the dash, tyre conditions and other damage (inside and out) are documented.
What a Missed Payment Can Trigger
- When does a payment count as late?
- Is there a grace period?
- How does the company work with you on a payment plan?
- Can the company repossess your car?
- What happens after your car is towed?
- Will you still owe money after your car is repossessed?
Before You Sign Anything
A rent-to-own car may be a good option for getting behind the wheel when other options aren’t available to you. Make sure you understand every aspect of the programme, from the first payment to owning the car, before you sign the contract. Take your time to compare programmes, look closely at the condition of the car, ask about maintenance and insurance requirements and learn what will happen if you end the contract early.
And before you take delivery of your rent-to-own car, ask for a payment schedule in writing and be sure to get a copy of your signed contract.
