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Written by Fact checked
If you have bad credit or no credit and are worried about being rejected for car finance, don’t worry; rent to own is a novel concept in owning your own vehicle without the need for a hefty deposit. Rent to own isn’t a type of loan, which means there’s no credit history check. All the provider needs to know is if you can afford the rent each week and you could be on your way to car ownership within a couple of years.
Whenever you apply for a loan or a credit product (this can also extend to post-paid mobile plans, for example), a lender will conduct a credit check. Accredited lenders conduct this check as part of their responsible lending practices. A credit check means they will request a copy of your credit history and your credit score. Your credit score is a number that shows your creditworthiness or how likely you are to pay back a loan. The higher the score, the better credit you have. Your credit score is a number between 0 to 1200 (or in some cases, 1000). Your credit history determines your score. If you have a low credit score or a bad credit history, this can hurt your chances of getting approved for a car loan.
You can gain access to a range of high quality and reliable vehicles using a rent to own agreement. A rent to own agreement means you get to use a car for a weekly rental fee and after about two years (though this may vary) you are given the option to buy the car. The rent you’ve paid slowly builds up over time and goes towards your eventual purchase of the car. Because a rental agreement isn’t a loan or a lease, there is no need for a formal credit check or deposit. All costs are covered within the rental payments you make each week.
Rent to own providers still conduct their own checks on your identity and financial history to make sure you can afford repayments without getting into financial trouble. This is becoming a popular way to get into car ownership without applying for a loan.
Rent to own is a straightforward process. You pick a car you want from available options and start paying rent each week. The provider does a quick check of your finances to make sure you can afford the payments. This is not a formal credit check of your credit score of history.
Once approved, you start renting the car as you would a rental car, except the rent is due each week – not upfront or at the end of the rental term. The benefit of renting a car is that you do not have to pay for registration, insurance, and scheduled servicing out of your own pocket. This is all covered by the provider. This makes the rental like a lease. A lease has obligations you must follow until you own the car outright; that means keeping it in good condition (as much as possible.)
At the end of the initial rental period, you’re given the option to buy the car using the funds already built up with the rent you’ve paid (plus any other costs that will be made known at the time), hand the car back, upgrade to a new car (and a new rental agreement) or walk away. You can also hand back the car at any time during the rental period, though you may have to forfeit the money paid into the vehicle.
Your credit history is a log of reports from banks or creditors and credit inquiries made on your behalf. Your credit activity is logged whenever you apply for a credit card, for a personal loan or mortgage, take out a mobile phone contract, or request an overdraft from your bank. It also records everything related to that credit product including repayments, defaults, and court judgements. Credit histories as of 2018 also contain information on credit card repayments and how close you are to your credit limit as part of “comprehensive credit reporting.” Paying off loans and making payments on time increases your credit score; late or incomplete repayments and/or defaults decreases your score. This decreases your chances of approval or excludes you from the most competitive interest rates.
The flipside to a bad credit history is having no credit history. This makes banks and lenders more cautious about lending to customers as they have nothing to base their decision on. Though it seems unfair (how do you get a credit history when you are refused credit to begin with?) it’s unfortunately a reality for students, apprentices, new arrivals to Australia, and even the self-employed. This creates a barrier into the credit market and getting finance for a vehicle. With a rent to own, none of these issues get in the way of buying a car.
There are all types of makes and models to choose from. You can find late model compact cars all the way up to eight-seater people movers. You can pick from sedans, SUVs, coupes, hatchbacks, wagons, and light commercial vehicles such as vans or utes. If you don’t see a model you like right now, you can check back in a week or two as the list and offers are always being updated. You can find cars all around Australia. You can pick up vehicles of your choice in Sydney, Melbourne, Brisbane, the Gold Coast, Perth, Adelaide, and surrounding regions like Ballarat, Mt. Isa, Ipswich, the Sunshine Coast, Geelong, Newcastle, Wollongong, Mandurah, and more.
Yes. We allow people with impaired or bad credit histories to apply for a rent to own vehicle as we do not check credit histories to see if they are eligible.
Yes, provided you can make the weekly rental payments. We figure this out by looking at your income and expenses each week.
You own the car at the end of the rental contract – this is typically anywhere between one and four years.
Yes. You can cancel your rental agreement at any time. However, the money paid into the car is not refunded.
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