What is Rent to Own?
Rent to own (also known as rent-to-buy) is a concept that has become increasingly popular in South Africa, especially amongst those with low incomes or bad credit. This type of car purchase allows the buyer to make monthly payments towards ownership without having to go through the traditional bank loan process.
The traditional way of purchasing a car involves taking out an auto loan from a bank or other lender, which requires good credit and income levels. For those who may not qualify for these loans due to their financial situation but still need access to transportation, rent-to-own can be a great option. As such, it’s important for potential buyers in South Africa to understand how this type of purchase works before diving in head first.
How Does Rent To Own Cars Work In South Africa?
When considering renting to own cars in South Africa there are several key points you should be aware of:
1) You will be signing into an agreement with the dealer where you agree on terms and conditions regarding buying the car through rental payments over time instead of one lump sum payment upfront; 2) Your monthly rental payments will include interest on top of your agreed purchase price; 3) There may also be additional fees associated with late payments or early termination; 4) The dealership holds title until you have paid off all your installments and then they transfer title/ownership directly onto you; 5) At any point during your contract period when you decide that you want out -you may return the vehicle with no penalty if all outstanding payments have been met up till date; 6) Once returned & all debts are paid – no further obligations exist between both parties involved (dealership & customer).
Benefits Of Rent To Own Cars In South Africa
Rent-to-own offers many benefits compared against traditional financing options available today: 1) Easier qualification criteria – since there’s less risk for lenders because they don’t actually take ownership over the property until after the final payment has been made, this form of finance isn’t based solely on someone’s credit score so it makes it easier for people with poor credit histories or limited incomes get approved quicker than usual.; 2 ) Lower downpayment amount required compared against traditional bank loans – even though some dealerships require deposits most often deposit amounts range around 10% whereas banks usually ask more than 20%; 3) Shorter repayment periods – term lengths offered by rent-to-own companies typically last anywhere from 12 months up towards 48 months whereas banks offer longer terms ranging up towards 72 months which adds extra costs due its extended duration.; 4 ) Fixed rate contracts – unlike traditional loans where rates can fluctuate depending on market conditions, rent–to–own agreements provide fixed rates throughout entire course thereby eliminating surprise increases along way.; 5 ) Opportunity build up equity while paying off debt – each month’s installment goes partly toward principle balance ensuring that borrower starts building equity even before fully owning property at end day thus helping them save money long run .
Things To Consider Before Signing Up For A Rental Car Agreement
Before committing yourself into any kind agreement involving rented vehicles here few things consider : 1.) Make sure read every single detail included within contract thoroughly including fine print order avoid surprises later down line ; 2.) Ask questions about any part do not understand prior signing document ; 3.) Check exactly what happens if unable pay back full amount owed at end lease period ; 4.) Ensure know what penalties apply case miss making timely instalments either continuously /accumulated basis ; 5 .) Research different providers compare prices services offered pick best deal available given current budget constraints . Lastly , ensure comfortable enough going ahead deal understanding implications associated renting versus outright buying remember always consult professional adviser opinion matters too much personal finances stake !
In conclusion,renting cars provides alternative solution difficult situations allowing greater flexibility freedom when comes deciding finally buy something .Before jumping right decision however ,it essential familiarize self pros cons involved picking plan suitable individual needs requirements order maximize savings benefit fullest extent possible !
