If you have been blacklisted, then you may find it especially difficult to get a loan for a large purchase, such as a car. In the past, people with a bad credit record were opting for a rent-to-own car finance plan but with more consumers picking up on the benefits of these easy car finance models, it is quickly becoming a preferred option.
The difference between a car lease agreement and a rent-to-own car agreement is that you will own the vehicle at the end of the contract. With a rent-to-own car finance plan, you will be paying for a car in the same way that you would if you are renting it. However, at the end of the contract term, instead of handing the car back to the vehicle rental company you are able to keep the car. Depending on the contract you choose, a portion of the rental fees you pay each month, go towards the final lump sum needed to purchase the car, or you will own the car at the end of the contract time period.
A few other differences include:
- Credit checks – Rent-to-own car finance companies don’t complete credit checks when approving your application, while banks will run a thorough background finance check.
- Down payment – A rent to own car finance company will require a down payment where a bank may or may not require one.
- Vehicle age – Rent-to-own cars are used, previously loved vehicles that have been checked by a qualified vehicle mechanic, while bank loans include new and used vehicles.
- Early termination – The down payment on your rent-to-own car will usually be forfeited if the contract is terminated early, where banks may charge you fees and penalties.