No, lease to own vehicles don't have the same kind of mileage restrictions on them as a leased car. In fact, lease to owns are more like rentals that you own after paying a set amount. There are some pros and cons surrounding lease to own cars; here's what we know.
Lease to Own Cars vs. Leased Vehicles
Lease to own, or rent to own, vehicles are a type of used car contract that typically comes from a buy here pay here (BHPH) dealer. These contracts allow you to drive a vehicle for a given amount of time while making payments – often weekly – until you have paid off the total cost of the car.
The main difference with a lease-to-own contract is that you can typically return the vehicle to the lot at any time and stop making payments. While you have the car you're responsible for keeping it covered with full coverage auto insurance, and for all maintenance and repairs. Like a standard lease, you can't customize the car until you own it.
But unlike leasing, there aren't any mileage restrictions or penalties for too much driving.
A leased vehicle, on the other hand, has restrictions on how much you can drive, and the condition of the car upon lease turn in. You can't modify the vehicle, and once your lease term is over you don't own it (you're typically given the option to buy it for its residual value, though).
Qualifying for a Lease to Own
Another major difference between leasing and lease to own contracts is that they're made for different types of borrowers. Traditional leasing is typically offered to people with good credit, while lease to own vehicles may be easier to come by if you're in a poor credit situation.
It's not impossible to qualify for a standard lease when you're struggling with credit issues, but they may be harder to qualify for. They also carry a higher-than-average money factor and may require one or more security deposits in order to get started.
When you take on a rent to own vehicle, you start the process at a BHPH dealer. These dealerships offer in-house financing and are the lender. These loans are often good for people with bad credit because BHPH dealers don't always check your credit.
In many cases, you can qualify for a lease to own vehicle just by proving that you have enough stable income to make your weekly/monthly payments and pay for insurance, and by bringing in a down payment. This means proving your income, but unlike a traditional auto loan, lease to own contracts don't typically have as many qualifications to meet.
The downside to a rent-to-own is that you may end up paying a lot for an older used car, and your timely payments may not make a positive impact on your credit. When lenders don't check your credit they're not as likely to report your payments to the credit bureaus.
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