Times have changed, and rent-to-own is now a possibility for almost any item in your home. For those who need a new vehicle, there’s even the option of rent-to-own cars. But is this a good idea?
Let’s take a closer look at what this means and if it really can be considered a good idea for those looking for a new set of wheels.
Rent-to-Own Cars: The Pros and Cons
It should be noted that with a rent-to-own agreement, you are not covered by the National Credit Act (NCA). Before signing any deal, you should read up on the Consumer Protection Act (CPA) to know your rights and what’s expected.
It’s a great idea for anyone serious about renting a car and eventually owning it. It’s also a good option as these contracts are generally linked to minimal buyout fees.
With these types of rent-to-own agreements, you have the opportunity to get your hands on the latest car models, basic insurance, tracking devices, and even roadside assistance.
It could be a smart choice for business owners looking for professional vehicles. If you’re working with Uber, Bolt, or other driving companies, it could be useful as you get access to cars in good condition. It also guarantees you get to make your money back as long as you can keep up with the payments.
Rent-to-own car contracts can be terminated at any time if you haven’t paid the deposit yet. And then there is the benefit of having the option to upgrade your vehicle after 18 months.
Reasons to Reconsider Rent-to-Own Cars
If you’re the type of spender who struggles to commit to long-term payments, you might want to reconsider, as this can lead to unnecessary debt and financial problems. Many with the same struggle have seen their cars and goods repossessed due to late payment.
When a car gets repossessed or you back out of the contract early, you will lose the funds you’ve already paid. This includes both your deposit and monthly instalments.
While rent-to-own car deals seem like a good idea in terms of short-term affordability, they are spread over a longer time period. This means you are subjected to more interest over your repayments.
If you plan on using the car for business purposes, you need to take a closer look at the mileage clause. With the majority of rent-to-own car agreements, there is a cap on the amount of monthly mileage. Should you exceed the cap limit, you will be charged per kilometre when the contract expires.
As a renter, you do not have the protection of the NCA, meaning that if you fail to make payments, the company has the full right to repossess the car. Some companies are incredibly strict and will repossess the vehicle within 7 days.
Rent-to-own cars may seem like a good idea, but ultimately, they remain an unsecured asset that is unprotected should you enter into debt review. The contracts are straightforward but also binding, and the responsibility of up-to-date payments is on you alone.
Before considering a rent-to-own car, you should take a closer look at the contract, your current debt, and spending habits and decide if you have room to add on.
What Debtline can do for you
We all know that the number one priority should always be to keep debt to a minimum. But if you’re overwhelmed by your current repayments, you don’t have to deal with it alone. Debt review is a smart option that can be your road to living debt-free – and Debtline can help.
As a professional debt counselling firm, we are here to assist anyone who requires it to relieve their debt. We offer access to NCR-registered debt counsellors who provide expert advice, assistance with debt repayments, and protection while you’re undergoing debt review.
If you or anyone you know is looking to get debt-free, contact our friendly team via the Debtline homepage, and we’ll call you back.