What is Rent-to-Buy?
With inflation at an all-time high and a declining economy, many South Africans, unfortunately, don’t have the opportunity to fulfil many of their basic needs or wants. Rent-to-buy cars in South Africa offer you the opportunity to turn your dreams of owning a car into a reality. But how does rent to buy work?
With rent-to-buy cars, you can finance a car by making regular monthly payments with the option to pay it off completely at any point throughout the contract duration. If you lack the funds upfront or are trying to establish credit, this can be a terrific method to get into a newer model.
Rent-to-buy vehicles allow you to efficiently travel within budget. All that’s needed is a deposit, the required documents and the first month’s rental!
Rent-To-Buy Turning Dreams Into Reality?
Essentially, rent-to-buy is a subscription model, making the process of owning a car very simple. Recently, customers have started exploring different financing solutions, which has resulted in the rent-to-buy market spiking in popularity. It’s the most economical method of transportation because warranties frequently cover any repairs. Regardless of your financial history, if you are currently able to afford a monthly subscription, you can easily own a pre-owned vehicle.
Have you ever fallen in love with a car, looked at the price and had to change your mind about it? You’re one of many that have faced this situation. Most people don’t have sufficient or available funds to buy a car, so they choose the rent-to-buy option. With rent-to-buy, you make a deposit, which is preceded by monthly installments for a specified period of time.
You then have the choice to return the car or buy it for the remaining amount. For individuals who desire flexibility and don’t mind paying monthly, rent-to-buy can be a terrific alternative.
What Are Cars Options?
Leasing a car and renting to buy are practically the same thing. Rent-to-buy contracts for vehicle rentals commonly continue for two to six years. Monthly payments are made for the use of the car, up to a certain amount of monthly mileage. The main distinction is that the lessee has the opportunity to buy the car at the end of the rental period for a set fee. There is no legal commitment to purchase the car.
Furthermore, credit score and financial background are not considered. If the client’s circumstances change and they no longer wish to purchase, the rental agreement is terminated. The car is returned without question. It’s the most economical method of transportation because warranties frequently cover any repairs.
With rent-to-buy, you may gradually enjoy the advantages of owning a car while maintaining the ability to make a bid on the vehicle at any moment. It’s essentially agreeing that there is a possibility of a future sale, but the choice remains yours. Therefore, think of it as a monthly car rental with the potential to eventually own the vehicle.
How Does Rent to Buy Work With Credit Scores?
A low credit score is one that falls below the creditworthiness threshold established by the majority of major lenders. This criterion is usually 620; however, this is dependent on the lender and loan type. Having low credit might make it challenging to secure a mortgage, purchase a vehicle or a place to live. Additionally, it can result in increased insurance and interest rates. A bad credit score can be improved by being timely with payments and upholding a good credit score history. Nevertheless, many rent-to-buy companies allow everyone to apply regardless of credit score.
Leasing vs Rent-To-Buy
Rent-to-buy is similar to leasing with the exception that at the end of the rental period, a part of your payment will be applied to the full purchase of the vehicle. When it comes to leasing, you will almost certainly have to take out a loan from a creditor. Should your credit score be below, there is a high chance that you will not be able to lease a car at a good monthly rate, or worse, there is no guarantee of any deal whatsoever.
For a person who wishes to change cars every few years, leasing could be a cost-effective choice. However, it does necessitate a decent credit rating. Whereas, rent-to-buy will give you the opportunity to someday purchase your own car. Your credit score will progressively rise if you make all of your payments timely.
Key takeaway: Rent-to-buy vehicles provides an affordable and flexible solution to owning a car. This agreement entails leasing a car for a set period of time with the option to buy it at the end of the loan-term. This solution provides a flexible and gradual path towards owning a car especially for those looking for alternative financing solutions.
Benefits
The benefits of rent-to-buy greatly surpass the negatives. In actuality, the only negative is that the car’s final cost does not decrease by the monthly instalments. They are the charges made for using the car. You can take advantage of affordable monthly instalments for the usage of a new or used car that is covered by the manufacturer’s warranty when you sign up for a rent-to-buy car.
Rent-to-buy offers convenience, affordability and flexibility. Meaning you get to select the desired vehicle and drive it for a set period of time at an agreed cost. Rent is substantially more affordable than the monthly payments on a car lease. Based on the vehicle’s residual value after depreciation, the purchase price is determined. You have two options at the end of the lease: purchasing the vehicle or returning it and renting a newer model.
Is Rent-To-Buy for You?
For some South Africans, rent-to-buy would be a good, logical option. With this option, you can own a car without making a hefty down payment. Additionally, you can eliminate the trouble of negotiating with car dealerships.
Again, it is crucial to conduct your research and ensure that you comprehend the terms and conditions before signing any contract. Be sure to enquire about anything that you are unsure of and carefully read through the agreement. Once you feel comfortable and sure, rent-to-buy is a fantastic option for those not looking for a long-term commitment as you will be able to rent a car of your choice for a short period of time and at the end of your contract either choose to buy it or return it.
You may be thinking, where can I rent-to-buy cars in Cape Town, and is there one near me? There are many rent-to-buy car dealerships throughout South Africa. There is a guarantee that there is a rent-to-buy service near you. You are sure to find the best rent-to-buy dealerships that provide cost-effective vehicles with a wide range of options to meet any of your requirements or wants.
Visit our rent to buy page today to find the best vehicle for your needs!