Owning a car gives you a lot of flexibility. It is for this very reason that saving up for a car often starts once you are employed. However, things don’t always go as planned and you might find yourself many years down the line, still in need of a car that is in a good condition. If you have a poor credit record or you don’t have more than R20,000 to pay for the deposit of a car, rent-to-own is a smart alternative.
Rent-to-own is an contract agreement where you may rent a car with the intention of owning it, at the end of the rental term. The agreement starts with an upfront administration fee. Thereafter, you need to pay monthly car rental payments to the car rental company. At the end of the contract term, you have the option to own the car that you have been renting.
If you earn a commission and not a fixed financial amount every month, a rent-to-own contract agreement may be a good solution for you and this is why:
The car rental payments are paid monthly in advance for you to rent the car for the month ahead. You do have the option to give one month notice and return the car if you are no longer in a financial position to pay the monthly car rental fee. This option is very helpful in the event of you being retrenched or on a fixed-term work contract.
Late payment penalties:
While the late payment of the car rental fees won’t affect your credit rating, it will lead to expensive penalties. If you are not able to pay the rental and you do not expect to make money either monthly or weekly, a rent-to-buy car agreement may not be the best option for you.
Unlike a vehicle loan where interest is added to the contract, no interest is added to a rent-to-own a car agreement. Therefore, if you are earning on a commission basis, this will help you achieve a better cash flow without having to worry about interest payments too.
Rent-to-own is a great way to own a car and it does works best if you are able to make a weekly or monthly payment without fail. If you are earning on a commission basis, you will find that a rent-to-own agreement is a smart alternative to traditional car financing.