One way to purchase a car is by entering into a rent to own contract. Rent to own is different than taking out a car loan or leasing a vehicle. When you rent to own a car, the dealership retains ownership of the car, while you make payments both towards renting the car and buying the car.
#1 Great for Individuals with Low Credit Scores
Rent to own programs are great for individuals who have low credit score. Many dealerships will consider individuals even if they have a low credit score for this program Some dealerships are only interested in if you have a regular job that comes with a regular paycheck; they just want to know if you have the income to make a payment. They may not even run your credit score if you can show that you have a regular source of income. If you need flexibility in credit requirements and you need a vehicle, rent to own programs may be the right fit for where you are in your financial life.
#2 Allows You to Make Weekly Payments
Sometimes, making a big monthly payment for a vehicle can be stressful. With rent to own programs, many allow you to make weekly or bi-weekly payments. Generally, your payments are made to align with your pay period, so if you get your paycheck on the
the 1st and 15th of the month, your payments will be on the 1st and 15th of the month as well.
Weekly or bi-weekly payments allow you to make smaller payments on every pay period instead of having to save up for one large payment per month. Making smaller, consistent payments can also shorten the length of the renting period until you own the vehicle. Instead of paying a car loan for six years, you may be able to pay off the cost of the vehicle in three years, for example.
#3 Small Down Payment is Required
With rent to own programs, they will usually ask you for a down payment. The down payment requirements are not as big as they are when you purchase a car. When you purchase a car, you are usually asked to put down around 20% of the price of the vehicle. When you rent a vehicle with the intent to purchase it, you generally have to put down a much smaller down payment, more around 10%. If you don't have money for a 20% down payment on a vehicle, the down payment terms when you rent with the intent to own can be much more reasonable and the dealership may be more willing to work with you on the down payment terms.
If you need a more flexible approach to purchasing a car for sale, a rent to own program may be the right fit for you. You can make weekly payments, put down a smaller down payment, and get credit approval based on your job, not your credit score.