Written by Rent-to-own cars, also known as rent-to-buy, provide an alternative path to vehicle ownership for those who may struggle to secure traditional car finance.
How do rent-to-own cars work?
A rent-to-own car arrangement, as the name suggests, allows you to rent a vehicle and then buy it at the end of the agreement. Unlike a traditional car rental, where you hire the car for a set period and then return it, with rent-to-own every payment goes towards the purchase price of the car. At the end of the contract, ownership transfers to you. However, until the final payment is made, you are effectively borrowing the car. Here are some key features of rent-to-own:
- Security deposit: most agreements require an upfront deposit, either a fixed amount or a percentage of the car’s value. In some cases, you may be able to out down a larger deposit, which can lower your ongoing payments or shorten the rental term.
- Regular payments: you will need to make regular rental payments over the agreed rental period. These are often weekly, though some providers may offer fortnightly or monthly options too.
- Insurance and running costs: the payments may also cover other car-related costs, such as insurance, registration and maintenance costs – though some providers may require you to cover these costs separately.
- Balloon payment: in most cases, a final lump sum will be required to complete the car purchase. You will also need to pay to transfer registration to your name.
Who is rent-to-own suitable for?
Rent-to-own car agreements are open to anyone but are particularly useful for those who may struggle to secure a traditional car loan. This could be:
- People with bad credit or no credit history who may not meet standard lending criteria.
- Self-employed workers or those with irregular income who find it difficult to prove stable earnings.
- New and temporary Australian residents who may not qualify for car finance due to their visa and lack of credit history in Australia.
- People receiving Centrelink benefits who need a vehicle but may face challenges with traditional lenders.
Can I get a rent-to-own car with no credit check?
Yes. Many rent-to-own car providers will not require or perform a credit check, as it is not a traditional loan product and you are not borrowing any money. While some may check your credit file, they typically focus on your current ability to make regular payments rather than your past credit history. However, you will still need to meet certain eligibility criteria, which may include:
- Being at least 21 years old (many providers have higher age requirements than loan providers).
- Holding a full, valid driver’s licence.
- Demonstrating a stable income to afford ongoing payments.
- Providing supporting documents such as bank statements.
How much will my rent-to-own car cost?
Rent for each car is set depending on its size, model and number of kms on the odometer, as well as the provider. Rates can start from as little as $80 per week for a sub-compact hatch all the way to over $250 late high-performance models. It all depends on what you need and what suits your budget. Other costs that rent to own customers must consider is the security deposit of set-up fee. Servicing, registration, and insurance is paid for by the rent to own company. As a lease holder, you must keep the car in good condition in the event you want to hand the car back. A rent to own company will not accept cars that are soiled or damaged and paying for repairs may be your responsibility.
Example scenario
Sarah recently moved to Brisbane on a four-year 482 working visa. She needs a car for work, and while she earns a stable salary, her limited Australian credit history and temporary visa status have made it difficult for her to secure a car loan.
To get on the road quickly, she opts for a rent-to-own agreement through a local provider in her area, choosing a small, used car to keep costs manageable. She pays a $1,000 deposit upfront and agrees to weekly payments of $180 over three years. These payments include registration and servicing costs throughout the rental period. At the end of the contract, Sarah pays a $500 residual fee to take full ownership of the car. In total, she pays $29,580.
Cost breakdown: $1,000 deposit + $28,080 in weekly payments ($180 × 156 weeks) + $500 residual = $29,580
The pros and cons of rent-to-own cars
Rent-to-own vs car loan
When looking for a way to buy a car, two common options are car loans and rent-to-own agreements. While both help you get behind the wheel, they work in very different ways. Here's how they compare:
| Rent-to-own | Car loan | |
|---|---|---|
| Vehicle choice | Limited selection from the provider | Use any dealer or private seller |
| Loan term | 1–4 years | 1–7 years |
| Age requirement | 18+ | Typically 21+ |
| Availability | May be restricted to certain areas | Nationwide |
| Credit requirements | No credit requirements, making it an accessible option for those with bad credit | Typically requires good to fair credit – though bad credit options may be available from specialist lenders |
| Upfront costs | Usually requires an upfront deposit or setup fee | No deposit required in most cases, though application fees may apply |
| Ongoing payments | Weekly, fortnightly or monthly rental payments that go towards ownership | Regular repayments with interest charges and potential monthly fees |
| Additional costs | Agreements may include insurance, rego, roadside assistance and maintenance | You are responsible for all running costs |
| Ownership | Ownership transfers only after final payment | You own the car from the start |
Rent-to-own cars can be a lifeline for those struggling to get approved for traditional car finance. But are they the best option? On the surface, it seems like an easy choice – minimal credit checks, straightforward approvals and simple rental payments.
However, even with running costs included, rent-to-own typically ends up far more expensive than a car loan.
While traditional lenders may reject applicants with poor credit, specialist lenders focus on your current financial position rather than your past history. A car loan gives you immediate ownership and, in most cases, a lower total cost.
Before committing to rent-to-own, it’s worth exploring all your options. Savvy has helped thousands of Australians with bad credit secure car loans. Getting a quick quote from our team won’t affect your credit score and could lead to a more affordable path to car ownership.
Your questions about rent to own answered
Are the cars new? What models are available?
Some rent to own cars are new, though most are late model cars that have been checked and certified. There are many models available such as SUVs, sedans, hatches, vans, and light commercial vehicles.
When will I own the car?
Each rental payment you make goes toward car ownership. You’ll typically reach the purchase point within two years or so. You can also make an offer to purchase the car before this point. This may vary depending on rent, the value of the car, and other factors.
I live in a regional area, can I get a rent to own car?
Yes, we have providers that can give you access to a rent to own car in regional Australia.
What if I don’t want the car any more? Is there a penalty?
No. There are no lock-in contracts and you can hand back the vehicle at any time. You will forfeit any rent put toward ownership of the car, however.
How do I get approved without a credit check?
Rent to own is not a type of loan or credit and does not require a credit check. Your provider will check your eligibility by looking at your income and expenses to see if rent to own is right for you.
What other costs do I need to consider?
Some cars will require an up front deposit. You will not have to pay for registration, insurance, or scheduled servicing, as it’s included in the weekly rent.
I have no credit history, can I get a rent to own car?
Yes. Rent to own is a suitable alternative for people with bad credit, new arrivals, and younger people with no credit history.
FAQs Title 8
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