If your credit score is damaged and you’re looking at the financing options available to you, you may come across a “rent to own” option. Rent to own is a type of auto financing program that's designed for borrowers with bad credit. Check out the pros and cons of rent to own programs to decide if one is right for you.
The Pros of Rent to Own Car Purchases
Rent to own contracts are a popular option for bad credit car buyers for many reasons, including that it’s easy to get approved and the process is fast. Rent to own programs are offered by in-house financing dealerships. These places are also lenders, so you're able to buy a vehicle and finance it all at the same place.
In addition to the convenience, here are three other advantages to rent to own financing:
No credit check – Unless the rent to own dealer states otherwise, your credit score isn't going to be used to qualify you. In fact, they likely won't even check it. Instead, they uses your income to approve you for a rent to own offer.- You own the car at the end – Rent to own programs work like this: you "rent" a vehicle for an agreed upon amount of time, make payments on it, and then you officially own it once the term is up.
- Flexible payment schedule – Some may see it as a drawback, but your car payment schedule may be tailored to your own pay paycheck schedule. Weekly, bi-weekly, or monthly payment plans may be on offer, depending on when you get paid.
The Cons of Rent to Own Programs
Like any other type of financing, there are some drawbacks to rent to own car purchases that you have to consider:
- May need a larger down payment – Rent to own dealerships usually require a down payment. How much money you need to put down generally depends on the price of the vehicle you choose. If you want to get approved, be prepared by saving up a down payment ahead of time.
- Vehicle selection is limited – Rent to own dealers only sell used cars, and selection is limited to what's on the lot at that particular moment in time. Inventory can range from older used vehicles to gently used models, so take your time when considering your options.
- May not get a chance to improve credit – Some rent to own dealerships don't report loans or timely payments to the credit bureaus. This would mean that your rent to own car purchase wouldn't allow you to improve your credit score over time like other auto loans do. Make sure to ask about the dealer's reporting policies before agreeing to anything.
Find a Car Dealership Near You
Whether you're looking for a bad credit car loan or a rent to own option, Drivers Lane can help. We work with a nationwide network of dealerships that offer many types of financing options to people with less than perfect credit.
We'll connect you with a dealer in your area if you get the process started by filling out our easy and free auto loan request form.
