Positive Effects Of A Rent-To-Own Car On Your Personal Finances

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Getting a bad credit score happens to the best of us.  But just because you fell into the hole, doesn’t mean you can’t get out of it.  There are ways for you to improve on your credit score.  One way is through car finance. Finance is excellent because after all the payments are made, you get to decide what to do and where you want to go with your car.

Rent to Own

The downside to finance is the high monthly payments.  That is one of the reasons people have opted to get a car lease.  The monthly rate is lower, you don’t have to worry about maintenance, and you can decide whether or not you buy the car when the contract is up.  It also has its upsides if you’re trying to improve your personal finance.  Here are a few ways it can help your financial situation.

No credit checks.  One of the reasons choosing rent to own is ideal for bad credit holders is that they don’t check your history.  To these dealers, all they need to know is that you have a home, an income that can guarantee a monthly payment, and a proof of identification.  And of course, you must have a down payment.  This lets the buyer build a new name for himself or herself slowly, and let their credit be just history.

No interest.  In car finance, you’re borrowing someone else’s money to pay for your car.  And they can charge you interest if you fail to keep your end of the deal.  When you lease a vehicle, the monthly payments you make will be for the car’s rental.  So, it’s always fixed.  That can help you balance your budget each month more efficiently.

No Effect on Credit.  Sometimes, budget blunders are unavoidable especially when faced with emergency situations.  When this happens, and you couldn’t make the payment deadline, you will be charged a late fee, but it won’t have any effect on your credit score.  But try not to make this a habit as being late on your bills is never a good thing.

Buy Second Hand

A car lease is best for people looking to improve their credit score little by little and get a car to drive around town at the same time.  But leasing does have its disadvantages.  For one, you can’t go on out-of-town trips with your car or risk running the odometer higher than what your contract allows.  You also can’t do much as far as modifications, and you don’t get insurance unless you buy it separately.

Another downside to leasing a car is that the payments never stop, and will only increase every time you renew the contract.  In comparison, a second-hand car will require a one-time fee and you’re done.  Here are a few advantages of getting a second-hand car:

Cheap. Purchasing a second-hand vehicle is a lot cheaper compared to finance and/or leasing.  Because these vehicles are already used, you can expect their price range to be 50% lower compared to the prices of brand new models.  It will still run the same, and get the job done just as a new car would.

More practical features.  When a new model of a car comes out, it usually comes with features like a rear camera for when you’re reversing into a parking space or a touch screen for the navigation system. These features increase the car’s price, and you may also have to pay big fees to have them repaired. Second-hand cars usually don’t offer these features and are only equipped with the practical ones, like a working turn signal and headlights.

Before you choose between finance, leasing, and purchasing a used car, weigh the pros and cons of each and how well you can survive on the cash that will be left.