Rent to Own Cars

What are rent to own cars? How can you rent to own your own car? Find out in our guide.

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, updated on September 13th, 2023       

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Rent to own cars is a method for people with bad or no credit history to own their own car without going through a formal loan application process. People who have adequate disposable income but find it difficult to obtain car finance are opting for rent to own options. Customers may have bad credit or discharged bankrupts, self-employed, working for labour-hire companies, on Centrelink benefits or are recent arrivals to Australia and/or on working visas. Rent to own cars require a security deposit upfront and are functionally the same as a lease, though there is an option to own the car at the end of the lease term. Rent to own agreements are not conventional credit agreements in the same way leases or car loans are.

What is a rent to own lease? What makes it different from a car loan?

Renting to own a car is much like renting a car except every payment goes toward owning the car. Renting a car means you don’t have to pay for maintenance, servicing, insurance, and registration. This is taken care of by the owner. The rent to own agreement is a like a lease – you are given use of a vehicle without owning it – for a set period, typically two to three years. Note that this is not a financial product and you are not paying any interest in your repayments like in a car loan. At the end of the lease term you can make an offer to buy the car based on the residual value, hand the car back (you can also hand it back at any time if you no longer need it), upgrade your car and start another lease, or keep leasing the car. Unlike a car loan, you will make repayments each week or fortnight instead of each month, which is the default repayment cycle for consumer car loans.

I’ve been refused for a car loan. How can I get approved for a rent to own car?

If you have been rejected by a lender or bank for a car loan, you may be eligible to rent a car which has an option to own at the end of a lease term. A rent to own agreement does not involve a check on your credit history or credit score. Your credit score is a number between 0 and 1200 (sometimes 1000) that lenders and banks use to figure out if you are a high-risk customer. The higher the score, the lower a customer’s risk. People with lower credit scores often find it difficult to find long-term finance like car loans.

The fact rent to own is not a credit product and does not involve a credit check is why rent to own is suitable for people with bad credit, bankrupts, recent arrivals, students, self-employed, or pension recipients.

Rent to own leases are not credit agreements or car loans. Your rent to own provider will ask is documentation and evidence that you can fulfill your regular repayments over the term. This is like applying for a car loan, except a rent to own provider will not conduct a formal credit check to determine your eligibility. You will also be required to pay a set-up fee or security deposit to begin the rent to own process.

Can I choose my own car?

Yes, you’ll choose a car that’s on offer from the rent to own provider. Instead of shopping for your own car from a dealer or private seller, you rent one of the cars that is in the stable of the provider. Many different cars are available, including compacts, family sedans, SUVs, 4x4s, and even light commercial vehicles of varying makes and models from popular manufacturers. All cars on offer are usually late models that are rigorously checked and hold current Roadworthy Certificates (RWC.) Selections of cars change as customers reserve them by applying and paying the set-up deposit. We can also assist with rent to own truck options if a truck is required. 

How much is the rent? What other costs are involved?

Rent for each car is set depending on its size, model, and number of Kms on the odometer. Car rental rates can start from as little as $80 for a sub-compact hatch all the way to over $250 late high-performance models. The rent will be higher for a late model luxury sedan compared with an early model compact with 80,000kms on the odometer, for example. 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.

When do I own the car?

You are given an option to purchase the car at the end of the loan term. The idea is that you have paid enough in rent to own the vehicle outright, but other higher value cars may require additional payments. After that time, you are responsible for insurance, registration, maintenance, and other on-road costs. If you walk away from the rent to own agreement early, you will not be eligible to own the car outright.

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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.

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.

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.

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 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.

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.

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.