What are the requirements for a lease-to-own vehicle?

A lease-to-own car is an agreement between you and the Buy Here Pay Here (BHPH) dealership. These vehicle deals are popular among borrowers with bad credit because the eligibility requirements are generally less stringent than traditional or even subprime auto loans.

The requirements of leasing with option to buy cars

Lease-to-own or lease-to-own vehicles are offered by dealerships with in-house financing. However, it is important to remember that a lease-to-own contract is not a loan. A lender does not give you money to pay for the vehicle.

Instead, the dealer determines how much you need to pay to officially own the vehicle, and then you make payments, weekly, bi-weekly, or monthly. All of your installments and down payments go towards the sale price of the car, but some dealerships may require a large payment at the end of the term. Once you’ve paid everything you owe, you own the vehicle!

For benefit from a rental car with option to buyyou must generally meet the following requirements:

  • Have a valid driver’s license
  • Provide proof of income, usually 30 days of computer generated pay stubs
  • Proof of residency is also required and can usually be satisfied with a recent utility bill in your name
  • Have a down payment; the amount required usually depends on the vehicle.

You may have noticed that there is no credit score requirement listed. It’s because BHPH dealerships offering lease-to-own contracts may skip the credit check! For borrowers with poor credit, a lease-to-own car could be the way to get the vehicle you need.

Details on vehicles rented with option to buy

The goal of a lease-to-own car is to own it at the end. The dealer holds the title until you’ve paid it all off and at the end of the term, it’s entirely yours. Most hire-purchase agreements typically last between 12 and 36 months.

BHPH dealers who extend lease-purchase agreements only sell used vehicles and are usually independent owners as well.

During a car lease with option to buy, you are responsible for making each payment on time and for maintaining car insurance. Repairs, regular maintenance and anything related to owning a vehicle are also your responsibility.

If you break the rental agreement, if the car insurance coverage expires or there are missing payments, it could mean that you are no longer eligible to buy the car. It depends on the language of the rental agreement, so be sure to read everything carefully so you know what you’re getting into. Some BHPH car lots can remotely deactivate your vehicle if you’re behind on a payment, and can even begin repossessing immediately.

Lease-to-own agreements are attractive to many borrowers with credit problems. Since BHPH dealerships may not check your credit, this is a decent automatic option to explore when your credit score is low. However, without a credit check, there may not be any credit repair opportunities either.

If a dealership doesn’t report the landlord lease or your payments on time, you’re not improving your credit score. Payment history is the most important factor in your overall credit score.

Don’t be afraid to ask about the details of your lease-to-own agreement and their credit reporting practices.

Other automatic options for bad borrowers

If fixing your tarnished credit history is a priority for you, then a subprime auto loan may be for you. These lenders are registered with special financial dealers and specialize in helping borrowers with poor credit. Borrowers with recently discharged bankruptcy, vehicle repossession, no credit, or past credit issues can often qualify for these auto loans if they meet the requirements.

Subprime lenders check your credit, but it’s not the deciding factor in your overall car loan eligibility. If you’re approved and stay current on car payments, your payments can help boost your credit score.

Need a car but your credit bothers you?

Having a lower credit score can be a hindrance to your next car purchase. However, Auto Express Credit wants to help you get to a vehicle!

Through our nationwide network of specialist finance dealers and in-house finance dealers, we’ll locate one in your area free of charge and with no obligation. Get started right away by filling out our car loan application form.

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