Rent-to-own is never a good idea, whether it is furniture, electronics, or cars. Especially cars.
How Rent-to-Own Cars Work
Rent-to-own dealerships are pretty much the same as buy-here-pay-here dealerships. The vehicles are generally of low quality and overly priced. The listed price is always higher than the retail value of the vehicle, and of course interest charges will be added on top of that. Quite often a buyer ends up paying more that 200 percent of the actual value of a vehicle once the contract is paid in full. Additionally, some rent-to-own dealerships do not apply the full amount of weekly ”rent” toward the purchase of the vehicle, forcing the buyer to pay even more to own their vehicle outright.
No Help to Your Credit
Other aspects of a rent-to-own car include having to make weekly payments, as opposed to monthly ones, and the agreement is not going to be reported to credit agencies. That means the you will be stuck with bad credit no matter what. In order for a paid-as-agreed vehicle to help bolster those lackluster credit ratings, it has to be reported to the credit bureaus. That history of timely debt repayment is what will win you the increased scores you need for lower rates, easier approvals, and just a less stressful life in general.
Important: You Don’t NEED to Resort to Rent-to-Own
Most consumers who resort to rent-to-own car lots do so because they believe it is their only option. This is rarely the case. Many dealerships have special finance departments who assist consumers in even the deepest subprime credit tiers, and there are many online loan companies that specialize in car loans for bad credit consumers. By spending less than an hour of your day, you can find a lender willing to loan you money for a vehicle. These lenders will report the loan to all of the major credit agencies, so the loan can help you rebuild your credit score. All you have to do is make the payments on-time.