Depending on your financial and credit situation your options may be limited. If you can’t secure funding through a standard auto loan you may be limited to car lots like buy-here, pay-here or rent-to-own.


We’ll step you through what a rent-to-own dealer is, the pros and cons of these loans and what it will take to get approved.

What are Rent-to-Own Cars?

A rent-to-own car is where you make payments directly to the car dealership. If you make all of your payments by the end of the rental agreement you get to own the car.


Getting approved for rent-to-own car financing is fairly easy and much similar to a traditional auto loan or getting an auto loan with bad credit.


A rent-to-own car is not a rental car. However, many rental car dealers will offer rent-to-own plans for their cars they no longer have in rotation as a way to recoup more money for their cars.

How Rent-to-Own Cars Work

A rent-to-own agreement is fairly simple. You make your payments like you would for a normal rental car and at the end of the agreement you buy the car from the rental company or subprime car lot.


For example, Bob has a credit score of 580 and decided on a rent-to-own car that’s priced at $10,000.


Bob made a down payment of $2,000.


Based on the agreement, Bob will pay $100 per week, or $400 per month, to rent the car and after 156 weeks (3 years) Bob will then own the car. This means that Bob will pay $14,400 for the car. The total cost to own the car is $16,400 ($14,400 in payments and $2,000 down).


To get a rent-to-own car you will need to make a down payment and have verifiable income. You will need all of the standard documentation for this as you would a traditional car loan (ID, proof of residence, proof of income, etc.).

Get a Rent-to-Own Car

Get connected with dealers near you that help get you in a rent-to-own car.

Rent-to-Own vs Subprime Car Loans

A rent-to-own car lot will create an agreement with you to make weekly, sometimes monthly, payments for the car over a set period of time. There is no credit check or interest rate as all payments are set. You will likely pay a higher monthly payment and get a worse car than if you were to get a subprime auto loan even with very bad credit.


A subprime loan is similar in a sense that you make payments over a set period of time. However, these loans will take into account your credit score and give you an interest rate. These loans typically come with some protections such as warranties, payment deferment and more.

Advantages of Rent-to-Own Car Loans

As with most financial decisions, you’ll want to weigh the pros and cons. A rent-to-own loan is no different than any other financial decision you will have to make.


Benefits of rent-to-own financing:

  • There is usually no credit check. The biggest component to a rent-to-own car deal is your income. Most places won’t check your credit as long as you have substantial work experience and history.
  • There is no interest rate. You pay a set price each week or month for the car and that fee doesn’t change until the agreement is complete.
  • There is no effect on your credit. In most cases these dealers will charge you fees but usually don’t report late payments to the credit bureaus, depending on your agreement.

Disadvantages of Rent-to-Own Car Loans

If you have bad credit and don’t want to use your credit to buy a car then a rent-to-own can be a great option for you. However, even though it’s considered to be easier to get a car it does come at a cost.


Negatives to rent-to-own financing:

  • It is expensive and you end up paying well over blue book value.
  • It requires timely and frequent payments, usually weekly.
  • It does not include warranties or other protections.
  • The car selection is minimal and likely used and battered.

The biggest thing to watch out for is early payoff or termination fees. If the car ends up needing a lot of repairs you might not be able to get out of the deal and be stuck with paying on a broken down car for months.

How are Rent-to-Own Cars Different from Leased Cars?

The biggest difference between a lease and a rent-to-own finance is that at the end of your rent-to-own contract you will own the car. At the end of a lease you will have the option to buy the car or return it.


car lease will usually require you to have a good credit score whereas a rent-to-own finance will not. As long as you have verifiable income and make your payments on time you should qualify for a rent-to-own car. Keep in mind – if you miss a single payment the dealer could cancel the purchase portion of your agreement and repossess the vehicle.

Alternatives to Rent-To-Own Cars

If you have bad credit your options may be limited but you do have options.


The best alternatives for rent-to-own financing:

  • BHPH Car Dealers – A buy-here, pay-here car dealer operates similar to rent-to-own but typically offers much better deals and loans.
  • Subprime Financing & Dealers – A subprime lender is specialized to work with less than stellar credit and car buyers who may not have the best income.
  • Used Car Financing – It may sound like it’s not an option but if you have a large enough down payment you can talk to a franchise car dealer or independent car dealer and likely work out a deal.
  • Private Seller – As long as you have the cash to buy a car from a private seller this is usually the way to go and you can negotiate a lower price.
  • Patience (Waiting) – If you’re not financially ready sometimes it’s best to wait and get your finances in order a bit more than to jump the gun and be stuck with a bad loan or bad rent-to-own agreement for 3+ years.

Get a Rent-to-Own Car

Get connected with dealers near you that help get you in a rent-to-own car.