Pros and Cons For Rent To Own Cars
Having bad credit can make anyone’s life difficult when trying to make major purchases such as car and home that require applying for a loan. So, if you want to purchase a car in Atlanta with bad credit history, you’re probably going to have a difficult time getting the approval for a standard auto loan. While some car buyers turn to bad credit auto loans, many Atlanta residents have started opting for rent to own cars for securing an affordable loan for their car purchase.
What Is A Rent To Own Car?
A rent-to-own car is basically a vehicle offered to individuals under a special agreement. In this agreement, the user pays for the vehicle as they would when renting a car. The only difference is that a portion of money spent throughout the rent period is contributed to the purchase.
For instance: You find an auto dealership in Atlanta that offers a rent-to-own program and get yourself a car. You can browse through available options and pick a car of your choice. Once you’ve made the right pick, you pay some cash in the form of down payment and then make rental payments, which is usually one payment in one week. In addition to making the down payment, the criteria for a rent to own car application also include proof of residence, proof of ID, and proof of income. Once you make the final payment, you own the car.
Pros Of Rent To Own Cars
- Payments on these vehicles are applied to a purchase and by the end of the term, you become the sole owner of the car.
- Credit Checks
- Unlike leases, this method does not require any credit check. In addition to this, the rent-to-own car payments are not even reported to credit bureaus as you are not borrowing any amount to make the payment.
- Fixed Payments
- Rent to own cars come with fixed payments. The payment terms can be somewhere between two-three years. You can also apply for dealer financing, if required to make the payments.
Disadvantages of Rent-to-Own Cars
- One of the biggest disadvantages of rent-to-own programs is that you pay significantly more for the product than its actual price. Even though it doesn’t require you to pay interest rate, payments made add up quite larger as compared to original value of the car.
- Frequent Payments
- You’re required to make payments more often than any average money borrower. It will be more frequent than what a person pays when he leases a car.
- No Effect on Credit
- Even if you make all the payments, there will no positive effect on your credit history. So, the success of this transaction will not help you built your credit score.
If after weighing the advantages and disadvantages of rent-to-own vehicles, you decide to go with this option, it’s advisable to investigate the dealership you’re considering. Make sure it is a legitimate business. Also, make sure you do all the tests to check whether the car is in its best shape or not. A Rent to own cars contract can prove to be a great deal for people who are unable to apply for standard loans due to bad credit history.