Renting-to-Own a Car: The Pros and Cons

While most car shoppers prefer to buy a new or used vehicle with cash, many people can’t afford to pay cash up front, and instead choose financing.

Rent-to-own car loans (or RTO) are one type of financing that has become increasingly popular in recent years, with millions of people renting-to-own cars every year in the U.S. So if you’re looking to rent-to-own a car, how does it work? What are the pros and cons? And what are your other options?

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What is a rent-to-own car?

Renting-to-own, or lease purchase, is a system used by some car dealerships to allow buyers to drive home in their new vehicle immediately after making their down payment.

In these cases, rather than financing a loan for 100% of the purchase price with an auto loan company for several years, you can lease your car from an auto dealer for a period of time (usually three to five years). As you make monthly payments over that period of time, you build equity in your vehicle.

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Understanding the Process

Rent-to-own is an arrangement in which consumers rent equipment (furniture, computers, vehicles), but also have an option to buy that item at some future point.

Renting with an option to purchase can seem like a great way to test out products before making large purchases, or for those who don’t qualify for traditional financing options. However, it’s important to understand how rent-to-own works so you know whether it’s right for you.

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Benefits of Rent To Own Car Leasing

Many people find that rent to own car leasing is actually easier than going through traditional financing. It’s fast, it’s easy, and you can start driving immediately. In fact, many people who are shopping for cars choose to finance their vehicles with lease-to-own options because they have no credit history or bad credit history.

With rent to own car leasing, even people with bad credit can get approved right away! You don’t need to be concerned about what your FICO score might be or if you have enough money saved up in order to make payments.

As long as you make your monthly payments on time and maintain insurance on your vehicle, there aren’t any hoops for you to jump through like there would be with other types of financing methods.

Are RTO Cars A Good Idea For Everyone?

Some people who rent-to-own cars are going through temporary financial difficulties, such as being between jobs, that may make it difficult to qualify for a traditional auto loan. Others may have bad credit, which prohibits them from being approved by most banks.

As with everything else in life, there are pros and cons to renting-to-own vehicles. Let’s look at some of these pros and cons to give you a better idea whether or not purchasing a vehicle through an RTO is right for you.

If you can afford to pay for insurance on your own car but need more time to rebuild your credit rating so that you can get approved for financing, renting-to-own could help solve two problems at once. With regular payments showing up on your credit report, your score will improve over time.

Drawbacks Of Rent To Own Car Leasing

Although renting-to-own a car is more affordable than buying new, there are some downsides. If you don’t like your car, you’ll have to pay a fee to return it and find another one. Also, since it can take up to two years or longer to own your vehicle via rent-to-own programs, most of them require high credit scores in order for you to qualify for financing.

Is This Option Suitable For Me?

If you have bad credit or are unable to secure financing through traditional means, renting-to-own may be for you. However, keep in mind that interest rates tend to be fairly high on rent-to-own agreements. You’ll need to consider whether those fees will be worth it when compared with securing financing through a bank or lending company.


Renting-to-own has become increasingly popular among those who are seeking to have a car but can’t afford to buy one outright. While rental-to-own is not without its drawbacks, it is still an excellent option for many consumers.

But as with anything else in life, you need to do your homework before making any decision especially one that will cost you thousands of dollars. Here’s what you need to know before considering a rent-to own car purchase.