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Rent To Own Cars and Leasing Options

1. Basic Car Lease and Rent To Own

So many times rent to own, sign and drive, and bad credit car lease deals can be a better option than waiting on your credit to improve. Due to personal financial circumstances, leasing a car with bad credit might be the best choice. However, many people might be under the impression that it is impossible to get a decent lease if you have bad credit. Auto leasing has been a good choice if:

  • You are interested in a new car
  • You plan to put less than 15,000 miles on the car per year
  • You have good to average credit

If this describes your situation than you are a good candidate for an auto lease. But before you run out to get that lease we suggest spending some time learning the ins and outs of a car lease and compare other similar options like rent to own.

Rent to own can be a good choice if:

  • You want a new or used car
  • You plan to purchase the car at the end of the agreed term
  • You have dependable income and stable residence
  • You can apply a down payment

With most car leases the lending company becomes the owner of the car, this means that the vehicle is no longer owned by the car dealer. For the best rates, you need to negotiate the sale with the dealer as if you were buying the car yourself. The price you agree on will be the price the lender will set up the lease with so it is important to get the lowest price possible and not to take the price the dealer offers you.

Leasing can get complicated if you have less than average credit. Not everyone wants to buy a car with bad credit, so let’s look at the advantages of a lease with bad credit and getting an auto loan with no credit. Filling out an application can get you in a car that can start repairing your credit so let’s look at the options for someone with poor credit. Putting it off can keep you waiting for your credit score to improve on its own and will take longer to improve your history.

Four easy steps to a car lease with bad credit.

  • Compare the advantages of leasing vs. rent to own
  • Find a car and negotiate the best price
  • Check the credit requirements and lease terms
  • Apply online for your bad credit car lease or rent to own.

2. Is A Car Lease Right For You?

Car Lease AdvantagesThe main advantage that a person might find when trying to lease a car if they have a low credit score, is that they will have an easier time obtaining a leasing agreement than getting an auto loan financed if your credit score is low. The second advantage is that a person who is leasing takes a car that is brand new and dependable. There is also a factory warranty that covers vehicle defects and breakdowns. This means that any major repairs that need to be made to the car will be paid by the cars manufacturer.

A third advantage is the payments are usually lower than a typical auto loan. Also, you can trade the car out for a different model at the end of the term.

It will greatly reduce the amount of stress that a person experiences when he or she is trying to get to work or school.

The final advantage is that a lease will positively affect a person’s credit score for each payment made on time. This is helpful because it will allow the credit score to be rebuilt through the lease itself, which will make applying for future loans more feasible.

On the flip side, you gain no assets for the money you pay out. The mileage you put on the car is limited, and you will be charged penalties for going over. You will also be required to have additional insurance coverage that will cost you more each month.

3. The Cost Of A Lease

stop lightMost methods of structuring a lease price can be confusing. As a rule, if your lease will cost you around $100 to $140 per $10,000 of the car price you can trust that to be a good deal.

The three factors that make up a lease price are depreciation, interest, and taxes. The largest of these factors is depreciation. Remember to get the best deal you must be ready to negotiate the selling price with the dealer. We offer a new car buying guide to help you do just that. It is always a good idea to choose a car with a high resale value whether you are leasing or renting to own. This will help with the depreciation cost at the end of the lease.

There Are Additional Fees To Consider When Planning Your Lease.

  • Acquisition fee (between $300 & $1,000)
  • Disposition fee
  • Security deposit (refundable)
  • Dealer doc fee, tag, title and registration fees

Remember to factor in the higher insurance fee for the required maximum coverage.

Bad Credit Car Lease

The most frequent question asked when a person wants to lease is what the lowest credit score can be. There is no simple answer to that question. A small number of lending companies will not even consider a customer that has a credit score that is lower than 620. It is obvious that most auto companies would prefer a person who is leasing a car to have excellent credit. Valley Auto Loans understands that it is not always possible and will work with anyone to get them the car that they need, even if they have a credit score of 500.

Calculating Monthly Payments

Lease CalculatorThe monthly payments with bad credit car lease programs are determined by three different factors

  1. The length of the loan.
  2. The down payment made when the lease is signed.
  3. The interest rate on the lease.

If a lease is for a longer period, then the monthly payments will not be as much because the loan will be stretched out. Putting up a large sum of money for a down payment will also cause the monthly payments for a lease to be much lower.

This is important because it will lower the amount of money that will need to be paid to the lender. If you have bad credit, it is very likely that you will need to put down a sum of money in the beginning. The most important factor on how much the monthly payment will be is the interest rate.

4. Rent To Own Cars vs. Lease

Sign and Drive LeaseOne option for people with bad credit is a lease to own cars. This type of arrangement is also known as rent to own option. They work almost exactly like a typical car lease but are specially organized so that they are more practical for people looking to rent who have bad credit. A person will pay for the car each month as if they are renting it. However, at the end of the car lease, they will promise to purchase the car, with a percentage of the money paid while leasing the car going towards the acquisition.

The Sign and Drive Lease

Car Leasing CostsSign & Drive deals sound like the deal of the century to anxious car buyers. The television commercials say that all you need to do is sign the lease and you are on your way. However, when it comes to car commercials, it is more about the fine print at the bottom of the screen. 1

The Sign & Drive Deals are one way that car dealers get more vehicles on the road and show revenue for those vehicles. If you are the right kind of buyer, then you can enjoy the benefits of this kind of transaction. However, before you get all excited about utilizing a sign & drive arrangement for your next car, you will want to weigh the pros and cons regarding these kinds of lease agreements. This kind of offer is designed by car dealers to sell cars. They will not help the people who need to get a car with no money down because the dealers have made it so they will not qualify.

No Up-Front Lease Costs

When you use a standard lease, it can cost you thousands of out of pocket dollars just to close the deal. You could almost buy a good used car with the money you have to put down on a lease. If you qualify for a sign and drive lease, you do not need to worry about paying those closing costs up front. You can drive off the lot with that money in your pocket.

5. Getting The Car You Want

You should walk into the dealership knowing what you want and how to negotiate a car price. There are obviously good things about car dealer’s sign & drive leases, and then there is the other side of the coin. When you use a dealer sign and drive lease, you get the car that is available for the program. You may want a car with tinted windows and a better stereo system, but what you will get is a factory standard model. Most sign and drive deals do not allow customers to upgrade their vehicles at all.

“No Money Down”

No Money Down Car LeaseWhen you close out the purchase of a car, whether you are leasing or buying, there are always extra charges you have to pay. There are charges due at signing for:

  • Registration
  • Taxes
  • Also, the title for the automobile

The television commercials may insinuate that you can drive away without spending money, but that is not what the fine print says on the screen as the commercial ends.

In all fairness, these costs usually add up to a few hundred dollars. You still save the thousands of dollars you would normally have to put down on a lease agreement. However, you need to be careful when assuming that a sign and drive lease requires no money down.


No matter how you slice it, the monthly payment for leasing a vehicle is always going to be lower than the monthly payment for buying the car. However, a sign and drive monthly payment will always be higher than a standard lease. It could be as much as 20 percent greater than a standard lease, 2 depending on the agreement you sign.

The car manufacturers have to make up their money somehow, so they raise the sign and drive lease payments to make up for the lack of a down payment.

How to lease a car with bad credit.

You can apply for a lease option with us, or you may want to talk to your dealer about a standard lease contract and see if that is a better deal for you. However, if you need a car and you want to repair your credit score within the next year you will need to look into a car purchase.

Lots Of Lease Terms

Lease TermsOne of the truly convenient things about car leasing is that there is a variety of conditions you can choose. Some manufacturers offer more generous terms than others, but our consumers can accept the agreement they feel most comfortable with for their vehicle payments by the lenders provided.

With a sign and drive lease, you do not have any choice on the terms of your agreement. The dealership will tell you the conditions and they usually are either 27 or 32 months. All of the other standard lease conditions apply, such as mileage limitations, but you do not get to choose from a variety of terms as you would a standard contract.

6. Making Changes to the Lease

Everything we have discussed so far applies to the factory standard sign and drive lease. You can make changes to a sign and drive lease, such as requesting extra miles, but it will cost you. The dealership will have a list of features you can change, but the list will be limited. Moreover, getting out of a lease is difficult.

Each time you ask for a change in your sign and drive lease, the monthly cost goes up.

At some point, you may be better off just going with the standard lease instead of the sign and drive option.

Credit Requirements

If an auto manufacturer is going to allow you to drive off the dealer lot with a new car without putting any money down, then you will need great credit to do it. If you ever record a sign and drive commercial, and freeze the scene where the conditions of the lease are displayed. Somewhere on the page will be a disclaimer which states that you must qualify 3 for the sign and drive lease to get it. That means that you need excellent credit. If you are self employed, you will need to prove your income with your 1099.

Auto manufacturers are always coming up with new ways to get people interested in buying cars. The sign and drive lease is a very helpful idea for people who are limited on cash but need a new vehicle. The process is simple, but there are plenty of things to look out for. If you want to lease a new automobile and don’t have much money to put up front, then you should look into a sign and drive arrangement. However, you should also compare your options to get the best deal. We can offer comparable lease options from multiple lenders who will review your credit and make you the best offer.

Can I Get Out Of My Lease Early?

If you need lower your car payments, and you have decided to get out of your car lease before the contract agreement is fulfilled, you will be charged stiff termination penalties. To avoid this, you may consider a lease transfer. Along with the termination fees comes a damaged credit score and make replacing the car difficult if you have to finance.

One option to prevent this is to transfer your lease. This is referred to as a “car lease swap.” There are websites available to find you a buyer for your lease. Swapalease.con is one of these many such sites. They specialize in reassigning your lease to buyers who review lists of people trying to get rid of their lease without the penalties.

What lease transfer can do for you

  • Your name comes off the lease, and the buyer assumes responsibility for the lease.
  • You pass your obligation to buy the car to the new buyer.
  • You are not penalized for early termination under your lease contract, so you do not pay lease termination fees.
  • Your credit will not get any bad marks because you did not default.

Car dealers who try to offer this type of help will pay off your existing lease but transfer your debt into another loan. You may end up paying for the cost of two cars and having your credit damaged so be cautious and don’t be fooled.

 Rent to Own Cars

Method 1: Purchase

Rent To Own Vehicles You see a car you like. You visit a dealer and make a deal. You’ll need to negotiate on the sale price, work out vehicle options and secure financing through the dealer or a third-party lender. Once you’ve signed the deal, you’ve bought the car. Now you are in debt to the loan provider, and you get to make monthly payments until you’ve paid off the loan. It is an entirely serviceable plan, one that most people follow when they buy a car. Once the loan is paid off, the car is yours, and you have established enough credit.

Method 2: Lease

To lease a car with no credit, you see a car you like. You visit a dealer and make a deal. You do not have as much room to negotiate with a lease, but otherwise the process is the same. You get the vehicle to drive off the lot, and you are on the hook for payments with the dealer for the length of the lease. Leasing allows you to drive a car far outside of your purchase price range, but with one significant downside: when the lease is up, you give the car back.

Method 3: Rent to Own a Car

Let’s look at rent to buy cars. You see a car you like. You visit a dealer and make an offer. You apply for an on-line lease with Valley Auto Loans to rent to own with bad credit. You are following the exact path for negotiating a car lease with bad credit, with one significant twist. Rather than giving the vehicle back, your monthly payments go towards buying the automobile and repairing your credit. When your contract is up, you own the car. Rent to own car dealerships are relatively rare, generally most useful for those who do not have the credit to secure the loans necessary to buy a car outright.

1. Rent to Own Vehicles vs. Leasing

  • Leased vehicles have to be given back at the end of the lease. Rent to own vehicles are yours when you finish the payments. You also have a trade in for your next car.
  • Leases require you to pass a credit check, where a rent to own situation just requires proof of income.
  • Leased vehicles are brand new or close to it. Rent to own vehicles tend to be older used cars, as these are not tied to dealer programs and franchises.
  • Leases typically have built-in warranty clauses for repairs within reasons. Rent to own vehicles are not covered by the same sort of warranty by default though additional warranties can be purchased.

Leasing has a few benefits, but it is not the right path for everyone since you do not have a car when it is all over. What’s the lowdown on rent to own?

2. Benefits of Rent to Own

  • When your contract is done, you own the vehicle. You do not have to give it back to anyone. You have built up equity in your vehicle. The title is transferred from the rent to own car dealers name to your name, and it is yours to do with as you will.
  • You do not need a high credit score to secure financing. Rent to own programs are designed for lower-income people, those who have fallen on hard times, need a serviceable vehicle and don’t have the credit or ability to secure financing for a new car.
  • Your payments will be smaller than you would be paying for a new car. This is because the total overall value of the car you are renting will be lower.
  • Again, because of the lower value of the car you are renting, your down payment is lower also.
  • You have no limits on the condition of the car or the miles you drive like you do in a lease.

3. Drawbacks of Rent to Own

Rent to own programs have a few drawbacks of their own.

  • Even though the value of the car you are buying is small, the amount you end up paying is high. In many cases, your down payment is a significant portion of the value of the vehicle. The rental payments are of great profit for the dealer or lender.
  • Depending on the rental contract at car dealers, you may have more than one payment per month. Some rent to own dealer agreements at car lots even requires weekly payments. Individual payments are smaller, but they are more frequent.
  • You’ll be forced to take care of any repairs on your own. Furthermore, You are also renting a used car, so the need for repairs are more likely. Some dealers will offer repair warranties for an additional fee, but it is precisely that; an additional charge.
  • The used car lot industry is littered with predatory companies that seek out fine print loopholes 4 looking for an opportunity to break the agreement. A single late payment may mean you are suddenly just renting a car, without the “to own” clause.

Rent To Own Can Be Expensive

Bad Credit Car Lease vs Rent To OwnThe main disadvantage is that this option can be a very expensive way to buy a car. A person will end up paying a lot more for the vehicle than it might be worth. Even without the interest payments, a person will end up paying way more in the long run. Most rent to own cars do not have any warranty, so if the car should break down, the person who owns the car could not have any protection. A good lease agreement is far better than this.

4. Payment Calculator

Check our resource page to find a list of calculators that can help you with your payment estimates. You will also see information on a lot of other helpful subjects also. Everything from starting a budget that will find you extra spending money to jumping a dead car battery or getting better gas mileage. Even how to plug a tire or replace your wiper blades and more.

Those with bad credit are extremely likely to have high-interest rates because they represent a greater risk to the lender. This will make each monthly payment higher than it would be otherwise. In order to reduce this factor, it is recommended to put down a larger down payment.

It Only Takes a Few Minutes to Apply With Our Easy Application

Undecided about leasing vs. financing and if you will qualify? It only takes a few minutes to fill out an application and have it processed. Then the lender will contact you with their offer that best fits you lease, or rent to own needs. You are not obligated to accept the offer, and there are no application fees to apply. You will see our application has three choices for financing. You can also pre-qualify for an auto loan even if you have poor credit, so you can go car shopping with a loan amount in hand. You can also apply for an auto refinance to lower your existing car payments or purchase a car from a private seller.  With Valley Auto Loans, you save a considerable amount of money over the duration of your loan.

The Bottom Line

The best option for your money is always to buy a car or rent to own, even if you have subprime credit and have to put up a substantial down payment. See our “New Car Buying Guide” that will give you steps to follow on how to get the best price on a new car and avoid dealer scams. We also have a great, “Used car buyers guide” that anyone who is shopping for a used car should read first. First-time car buyers can find out how to shop around, secure an auto loan and negotiate with the seller. You will not be able to afford the latest BMW, sure. However, you’ll probably be able to secure financing for a nice dependable car. For your money, a purchase is the best value. So after you make a few payments and repair some credit mistakes you could apply to refinance the loan for lower installments. You can also request a sign and drive lease or rent to own today!

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