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Car Leasing Types and Rent to Own Deals

Pros and Cons of Car Leasing and Rent to Own Vehicles

Car leasing and rent to own deals are often considered a good choice for people with bad credit. These deals are particularly good for those who can’t get a conventional loan. Car leasing allows you to get a car without anyone digging into your credit history. For car leasing, you must be one of the following:

  • Needing a new vehicle
  • Needing a car to drive more than 15,000 miles a year
  • Have at least an average credit rating
  • Have a regular income to pay the lease
  • Have a stable residency

Are you worried because you do not fit the above criteria? Don’t! At Car Loan Cash Now we can help find you alternatives to car leasing even if you have a bad credit score.

When to Use Rent to Own Vehicles

As with car leasing, there are specific situations when a rent to own car can be a good choice. Rent to own vehicles are good if you:

  • Are searching for a new or used car
  • Want to own the vehicle at the end of the specified term
  • Have a stable residency and regular income
  • Can make a small down payment
  • Can qualify for a subprime auto loan

Don’t forget that there are many loan options available. It is important to take the time to search through the variety of bad credit auto loans before making a decision. Don’t limit yourself to rent to own deals just because you think you won’t get a decent loan with a poor credit score.

What is Car Leasing?

When you enter a car lease, you don’t become the owner of the vehicle. This right belongs to the company that provides you with the financing. In the eyes of the dealer, they are selling the vehicle right away. So, it’s only natural that they try to get the best deal for themselves by setting the highest rates.

With car leasing, you’ll have to take this into account and negotiate with the dealer. Getting a lower price is in your best interest. With this in mind, be sure to shop around and keep an eye open for offers and discounts. The better the deal you find, the better your terms will be.

Buying a car is different from leasing. Both can be difficult if you have a bad credit score. In this article, we will compare the pros and cons of both options. This will enable you to make an informed decision when you start looking for a car with a bad credit rating.

Don’t put off your decision because you want to wait until your finances improve. On the contrary, a bad credit car loan will help you rebuild your credit score.

Bad Credit Car Leasing in 4 Steps

There are four steps to car leasing if you have bad credit. These are:

  1. Research your options and compare the pros and cons of rent to own vs. car leasing.
  2. Shop around for the vehicle you want to lease or buy.
  3. Note that if you are choosing to lease you can look at new cars (when buying you can choose between both new and used cars).
  4. Find out the credit requirements and other terms of the deal.
  5. Apply for a rent to own or car lease online.

Car Leasing Overview: Pros, Cons, and Actual Costs of Car Leasing

Car Leasing Advantages

There are many advantages associated with car leasing. These make many people believe that this option is their best bet compared to bad credit car loans. Advantages include:

  • Obtaining a car lease can be easier than a subprime loan with good terms.
  • You will receive a new and reliable vehicle for the duration of the lease. As the car is new, the manufacturer’s warranty will apply, so you’ll be covered in case of sudden breakdowns.
  • In the majority of cases, lease payments are lower than regular bad credit auto loan payments.
  • You might get a chance to trade your vehicle for a new lease model at the end of your current contract.
  • A traditional lease will count towards rebuilding your credit score.
  • This will make it easier for you to get a conventional loan in the future.

Disadvantages of Car Leasing

You should always keep in mind the cons of choosing car leasing if you have a bad credit rating. There may not be as many disadvantages, but some are serious points you may want to consider. Some of these include:

  • Your regular payments do not give you ownership of the vehicle.
  • Leased vehicles come with a set mileage limit. If you go over the limit you may receive severe penalties.
  • You’ll have to buy extra insurance. This will increase your monthly payments.
  • Any missed payments will reflect on your credit score, lowering it further.

Real Car Leasing Costs

The exact rates and terms vary depending on the financing institution. You’ll need to research and compare the options available to you. It’s important to understand that the structure of car leasing prices are complex as there are many factors involved. The most important of them are:

  • Interest
  • Taxes
  • Depreciation

On average, a good deal is around $100-$140 for every $10,000 of the vehicle’s price. This is the reason why it’s so important to do your best to negotiate the lowest price with the dealer.

Another helpful trick is to look for a vehicle with a high resale value as this will lower the depreciation rate. This particular factor is the largest influence that ups the cost of a car lease. Minimizing it should be one of your main objectives.

Don’t forget about the insurance you’ll have to buy to meet the terms of the lease. Usually, it’s the one with the largest coverage, meaning the highest premiums.

Car Lease Planning: Extra Fees

Car leasing is not as simple as paying a monthly or weekly fee. There are other fees that are not always obvious. These include:

  • Disposition fee
  • New lease acquisition fee (usually around $300-$1,000)
  • Fees set by the car dealership (dealer doc fee, registration, tag, etc.)
  • Security deposit (refundable)

Car Leasing with Bad Credit

Auto lease providers differ in their attitudes toward credit ratings. Many companies won’t deal with you if your score is below 620. They do this to protect their interests. Lease providers consider those with a lower rating to be high-risk borrowers. These types of borrower are more likely to default on their payments. As institutions put their money on the line, they do what they can to protect themselves.

However, some car lease providers agree to work with people who have a bad credit rating. At Car Loan Cash Now we will help you find a financing option that will provide you with the vehicle you need. Regardless of how bad your current credit score is, you can trust us to match you up with a lender that will offer you reasonable terms.

How to Calculate Monthly Auto Lease Payments

If you go for bad credit car leasing, your payments are determined by the following factors:

  1. Down payment
  2. Length of the lease
  3. Interest rates on the lease

The longer the term of the lease is, the smaller your monthly payments will be. You can also reduce them by providing a large down payment. The latter option is especially efficient if you have a bad credit rating. Offering a bigger down payment reduces the risks to the lender and can motivate them to offer lower interest rates.

Buying a Leased Car at the End of the Lease

When car leasing, you make regular payments without receiving ownership of the vehicle. That said, some lease agreements offer a buyout option.

If you want to go for this option, you’ll need to study the contract and make some careful calculations. Often these deals mean you pay a large sum of money meaning you may be better off buying a used vehicle at the end of your lease.

Leasing Vs. Rent to Own Car Deals

The ‘lease to own’ or ‘rent to own’ car deals are one of the most popular options for people with bad credit. These allow people to get a vehicle when conventional loans are not available. In essence, this type of financing is like a regular car lease. These deals are usually aimed at people with poor credit who can’t get approval for other types of financing.

In this case, you would make regular payments as if you are renting the vehicle. But, by the end of the contract, you would own it. With this option, a percentage of the monthly payments go towards paying for the car.

Rent to Buy Car Deals

With this kind of deal, you search for a car you want and arrange to buy it. The dealer and the lender pay for the vehicle. With the paperwork settled, the lender pays the money and you come a step closer to being a car owner. Once you pay off the loan through regular payments, the vehicle is yours. Once you’ve made the payments, you get a boon to your credit rating thanks to a successful loan.

Leasing Does not Give you Ownership of the Vehicle

This process is, in essence, the same as the one mentioned above. Because your credit score is poor and you’re leasing, you won’t have a chance to negotiate much. This means you’ll have no choice but to agree to the dealer and lender’s terms which can be unfavorable.

The upside of this deal is that you can lease a car that would be out of your buying price range. With this deal, you won’t be the owner of the car at the end of the lease term.

Bad Credit Rent to Own

With Car Loan Cash Now, you have a variety of options available to you if you choose to go with a rent to buy deal. A simple online application will have our experienced agents getting to work straight away. They will search through our database of lenders to find the deal that best suits you.

We work with a large number of financial institutions that deal with poor credit borrowers. They will treat you like any other person and offer reasonable terms. Of course, there are some things you’ll have to accept, such as slightly higher rates.

Even with higher interest rate, this deal is not anywhere near the worst you could get. You’ll get a fair chance at buying a vehicle despite your credit score.

Advantages of Rent to Own Car Deals

Rent to own car deals boast many advantages. Below, we’ve put together a list of some of the most appealing factors of a rent to own car deal:

  • You become the owner of the vehicle when you sign the contract. This will allow you to drive it with no mileage limitations. This also gives you equity in the vehicle.
  • You can get financing even if your credit score is poor. These deals are for people with bad credit, so your chance of getting a loan is higher than with any other option. With the help of Car Loan Cash Now, you can find a lender no matter what your credit circumstances are.
  • You get the chance to make a smaller down payment. As rent to own deals offer pre-owned and medium-class vehicles, their cost is lower than with other leases. As a result, the down payment will be smaller.
  • Your monthly payments won’t be ridiculous. Similarly to the down payment, the size of your monthly payments depend on the actual cost of the vehicle. Reducing this amount will cut the costs.
  • You won’t be limited to rules on how to deal with the vehicle (mileage limits, taking the car out of state, etc.)

Disadvantages of Rent to Own Deals

Above we’ve highlighted some of the main advantages of rent to own deals. As with everything, there are also disadvantages to think about:

  • You will overpay for the car even if its value is not much by default. The lenders that offer bad credit rent to own car deals do make a hefty profit. As these vehicles are usually cheap, your down payment alone often makes up a big part of the car’s value. Monthly payments will make the vehicle much more expensive in the long run.
  • You may need to make more frequent payments. These terms are set by the lender, but weekly payments aren’t uncommon.
  • You can’t enjoy the manufacturer’s warranty. If you ‘rent to own’ a used car, you’ll have to pay for any repairs and maintenance out of your own pocket. You might buy a warranty from the dealer, but this will also cost extra money.
  • You may fall prey to an unscrupulous used car dealer. Quite often used car dealerships aren’t honest. Be sure to study your contract in detail. Consider having a legal professional look it through before signing.

All in all, rent to own car deals are rather expensive. There is no arguing the fact that you’ll get a car even if your credit is poor, but you’ll end up overpaying for it. With no warranty and potential issues with the dealer, a lease may be better, but only if its terms are good.

Sign and Drive Car Leases

Clever ads make car leasing sound like the best deal for buyers who cannot get a conventional lease. Unfortunately, nothing is simple when it comes to leases of any kind. The fine print of these contracts usually includes terms that make them unfavorable.

You need to understand that sign and drive leases are not available to bad credit holders and those unable to make a down payment. These deals are here to sell more cars and the only people getting a good deal from them are the dealers.

That said, sign and drive deals do save you from paying the upfront costs of a regular lease. If you pay the money to close the lease you can buy a medium-quality used car. This is the main reasons people with financial issues can’t afford these deals by default.

How to Get the Car You Want with Sign and Drive

Start by deciding on the kind of car you want to get and look for a sign and drive dealer lot that offers it. Vehicles offered under this program are usually limited to basic factory models. Consequently, you need to remember to be realistic with your expectations.

If you want a car with tinted windows or a stereo system, you might need to look for other financing options. Contact Car Loan Cash Now to learn more about the choices available to you.

Note that you’ll have to pay some extra fees when dealing with sign and drive deals. This is the same as any other lease or loan. They should cover taxes, registration, title, etc. With this, you’ll definitely save a lot of money compared to a regular lease.

The important thing is that regardless of the claims that sign and drive car leases make, they do not ask for a down payment. You will have to pay SOME of the fees upfront.

Sign and Drive Payments and Terms

The one thing you can be 100% sure of is that the monthly payments with a car lease will be lower than with a car loan. Other than this, sign and drive leases ask for higher payments than regular ones. The difference can get as high as 20%, so study your options before signing anything.

A huge disadvantage of sign and drive car leases is that they have lots of terms attached to them. There are different conditions you can choose from when dealing with regular car leasing. Unfortunately, these are all somewhat restrictive and unfavorable.

Sign and drive leases leave you no option to pick your own conditions. You’ll have to follow the terms of the lease no matter how limiting they may be. These leases run from 27 to 32 months, have mileage limitations, and other restrictions.

Can I Get My Car Lease Changed?

Yes. You can apply for an extension of mileage and some other changes to your lease, even if it’s sign and drive. To get these benefits you will have to pay a hefty sum of money. You may also face large penalties for breaking the terms of the lease agreement.

Terminating a Car Lease Early

Early termination of a car lease is possible, but it’s expensive. You will actually spend less money sticking with the deal until the end. Termination fees are something you should look at in detail before you sign the lease. Always bear in mind that you might damage your credit score by taking this step.

You can try and avoid problems by transferring your lease (also known as making a ‘lease swap’). In this case, you’ll have to sell your lease to someone and reassign it. There are websites where you can find buyers and car dealers that can help. In the latter case, your lease will change to a loan from a different lender. This can turn out to be even more expensive in the long run.

If successful, benefits of a ‘lease swap’ include:

  • The responsibility for the lease is completely transferred to the buyer.
  • You pass on all your obligations.
  • Your credit is safe from black marks as you avoid defaulting on the lease.
  • You avoid penalties and termination fees.

Get Bad Credit Car Financing with Good Terms

If you don’t know whether car leasing or bad credit auto loans are the best option for you, we can help. At Car Loan Cash Now we can find the right financing for you. We offer a payment calculator to help you plan your budget depending on different deal terms. We can also provide you with a variety of tips and guides that will help you get the car you need.

Car Loan Cash Now Services

You can rely on our services to help you navigate the complex world of bad credit auto financing. We do not ask for an application fee or any obligation on your behalf. We can also get you pre-qualified for the financing option of your choosing. This will allow you go to a car dealer’s lot knowing how much money you can spend on a vehicle.

Whether you need a new or used car, a lease or a loan, we’ll know how to guide you to the best deal available for you. At Car Loan Cash Now we also assist people trapped in bad credit auto loans to get them refinanced. This way, you will have the chance to lower your monthly payments and save a lot of money in the long run.

No matter how good car leasing may sound, buying your own vehicle is always the best option. A poor credit score makes obtaining a car loan more challenging. But, with Car Loan Cash Now you’ll be able to get one no matter how low your rating is.

Don’t limit yourself to deals that are sure to make you overpay for a vehicle. Explore your options. Even with a bad credit rating, getting a car loan with good interest rates and down payments is possible. Fill out our free online application form today and we’ll find the best options for you. To find out more about all our car leasing and loan options, contact Car Loan Cash Now today!