Lease to Own Car Vs. Leasing a Car

Is “Lease to Own” a Form of Leasing?

When dealers offer a service, like a “lease to own” car or “rent to own car,” a lot of consumers tend to confuse it with a conventional lease program. The contracts that are “leasing to own” and “leasing” are different. Below we will compare leasing a car vs. lease to own car dealers.


Credit Score


If a person with poor or no credit comes to a dealership for the leasing option, there is a great chance that he will be turned down. The lender may feel that a person with poor credit won’t be able to keep up with payments. Lease to own dealers is also called rent to own car dealers. They are designed for those that have poor credit.

Lease to own:

The lease to own car dealers have requirements for someone who wants an auto loan, though the credit rating is not much a concern. The lease to own company would expect that the person has a source of income that is regular, provide proof of accommodation, contact and especially identification. Using a lease to own a car dealer can help to boost your credit rating. Many dealers send the loan and payment report to the Credit bureau, which in turn, improves their credit rating. A lot of people with bad credit see it as a second chance, as they can both have access to a vehicle and increase their credit rating.

lease to own carMoney

Down Payments


When you lease a car, you will be expected to make these payments:

  • The security deposit (refundable if nothing happens to the car)
  • Taxes
  • Down payment
  • Payment for the initial month
  • Registration fees and a host of other fees

Lease To Own:

What is expected of you are mostly taxes, down payment, registration fees. Though, they may vary from one organization to another. It is possible to have access to an auto loan that lasts longer. You may have to pay a lot in interest and fees to the extent that you get negative equity on that car.

Monthly Payments


In a lot of situations, the amount paid on the lease is usually lesser than the amount that would have been paid if one had opted for lease to own car. How is this possible? In the leasing company, you are mainly paying for the depreciation on the vehicle.

Lease to own:

The amount that you pay as low payments usually ends up being greater than leasing. Why is this so? Since you have the intention of owning the vehicle, you are paying its whole price.

lease to own car

Car Condition



The future worth of the vehicle is not your concern as a lessee, and what this means is that you have absolutely no equity on it. This means that you can’t use the car to procure a loan.

Lease to own:

This option means that the vehicle will depreciate, but it won’t depreciate as a new car would because the use of cars’ depreciation rate is reduced. If it were a new car, the depreciation rate would be high in the first few years, especially the first year, but after the few years elapse, the car won’t be depreciating like before.

Car Customization


The dealers want the car to remain in the optimum state to allow them to resell it after the agreement ends. When you damage the car, in any way, you will pay extra for it. Or, if the modifications you made are permanent, you will pay for them. If you have a leasing company that allows a bit of modification, then you will be expected to strip the car of them after the lease comes to an end.

Lease to own:

Many rent to own car companies allow you to make modifications to the car, but you have to inquire first. Whatever you do to the car, ensure you make your payments on time, or you may be penalized. While the rent to own car dealer may allow you to alter the car, it is sensible that you do it in such a manner that the worth won’t be reduced.

lease to own carCar Title



After the car payments are completed you return it after the term. If you want to buy it, you will have to carry out another set of negotiations.

Lease To Own:

You can only own the car once the payments are made. Once you meet the dealer, you will be told how much is expected and for how long. Other conditions must be kept in the term. Once you keep to them, you own the car. You can then customize it the way you wish.

Buying the Car


Traditional leasing companies, on the other hand, needs the applicant to have great credit. Many of them state the minimum amount of good credit that a person must have before the application is approved. This doesn’t mean that there haven’t been cases of those with bad credit been approved, but it is almost impossible. If a lessee has a poor credit rating and is approved, he will be given a very high rate, far higher than what those with good credit rating get.

You aren’t given the car even after making the last payment, except if you and the dealership alter the agreement. The dealer may decide that you pay a fixed amount to claim the vehicle. When you decide to lease a car, every payment that you make is meant to merely use the car for the period of the payments, none of it is meant for the purchase of the vehicle.

Lease to Own:

A lot of the lease to own car dealers usually have in-house lending, meaning that they don’t bother to make use of third-party dealers. Since they have this option, they see no reason they should get involved in running a credit check before financing can be done.

In lease to own car agreements, as long as you are regular in your payments, and follow the terms in the contract, the car becomes your own once the term ends. You won’t be stopped if you decide that you don’t want to be a part of the contract again. One thing that you should know once you make this decision is that you lose every payment you have made in the past. You won’t be refunded any amount.

rent to ownEnding the Contract

Early Termination


If you decide that you are tired of the lease before it expires, you don’t just merely return the car. You will be expected to part with what is called, ‘early termination fees.’ This means that since you broke the agreement, there is a penalty that you have to face. The early termination fees are usually as expensive as remaining put for the lease’s term to expire. In the case of leasing, breaking it is a case of penny wise, pound foolish.

Lease to own:

You can decide that you don’t want a part of the agreement and all you have to do is to trade it in.  Especially true if you have not defaulted on payment with the rent to own car option. On the other hand, you sell off the car and use the money to pay the auto loan off.

Vehicle Return


Once the lease ends, you are meant to return the car. You have nothing else tying you the car! You can jump to the next lease agreement and a new vehicle.

Lease to own:

Once you are done making the payments, you can decide to sell it, or trade it in if you want to get a new one. It is that simple. Why not contact Car Loans of America today?

rent to ownBest Lease to Own Car Options

Many of the cars that one can have access to are those, though old, some mileage on them. This means that depreciation is low on them. One thing that a lot of consumers don’t know is that their brand new cars depreciate quickly immediately bought. It depreciates a lot more in those few years than when old. This means that a used car doesn’t depreciate as much as a new car. A great win for lease to own car dealers. If you have no problem with making payments regularly and having a brand new car, leasing may do the trick for you. One thing that you should be ready for is you must have an excellent credit rating.

For those with bad credit problems, a rent to own car program is something that you should consider opting for because no financing company will want to take the risk. One thing that should be noted is that it isn’t an affordable venture. Before you opt for a rent to own car dealer, it is important to find out if they report both loans and payments to the Credit bureau. If they don’t, this means that the payments won’t affect your credit score. Car Loans of America can link you up to those lease to own car dealers that report their loans and payments, hence improve your credit rating. The FDIC has an article on financing or leasing a car

rent to ownAffording a Car

A car loan is a short-term cash advance intended to help a borrower to purchase a vehicle such as a car, truck, van, or motorcycle. In return, the lender expects to receive monthly installments until the principal and interest are fully paid back.

What we will do is to link you with dealerships around your area that offer a program suitable for you. This way, you can be assured that your application won’t be rejected. Opting for our services is free. To proceed, use our online application or call us at 866-601-2749.

Credit Building

A poor credit rating shouldn’t be seen as the end of the world, as financing that car can give you the credit repair advantage that you need. With a bad credit car loan, all you have to do is pay your monthly installments on time and it will show that you are a responsible borrower.