Amy's Amazing Auto Service and Repair Blog

Could a Rent-to-Own Agreement Enable You to Get Those All-Important Wheels?

by Derek Davidson

Many towns and cities across Australia can be defined as sprawling. Planners may have had the luxury of space when designing each neighbourhood and this means that it is very difficult to travel around without the use of a car. For some people, this can represent a significant issue, especially if they don't have the means to buy a vehicle outright or if they have a particularly poor credit rating. They may find themselves in a quandary as they have to get to work even though it's a long way away from where they live. If you're in this situation, you might want to consider a strategy known as "rent-to-own," but what is involved with this strategy, and could it be for you?

Challenges of a Lease Agreement

As you may know, it is possible to buy a car under a formal lease agreement and to pay a reduced amount per month until the lease is up. In theory, you could buy that vehicle by paying the lessor a certain sum, or you could simply give it back at the end of the contract. The problem with this type of agreement is that it will generally require a good credit rating and the individual may also be required to put down a certain amount of cash before kicking things off. In your case, those terms may not be practical.

Similar, but Different

A rent-to-own agreement is, in many respects, similar to a lease contract. However, in this case, you will rent the vehicle for a certain amount of time, so long as you can afford (and commit) to pay the agreed sum on time. The individual payments will go towards the cost of rental as well as the value of the vehicle itself. Then, at the end of the agreement and once you have made all your payments as required, the owner will sign over ownership to you. Depending on the type of agreement you may have to pay a lump sum, but this is usually relatively small.

Crucial Advantage

Typically, you can enter into a rent to own agreement without too many credit checks. In some cases, the owner may not do any checks at all and so your lower credit rating will not be an issue. Still, you must ensure that you can deal with the payment amounts and never fall into arrears, as otherwise, you could be back in square one.

Learn more about rent-to-own cars today.