What are the requirements for a leased vehicle to own a vehicle?

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A rental car is an agreement between you and the Buy here pay here (BHPH) dealership. These vehicle deals are popular among bad credit borrowers because the requirements to qualify are usually less stringent than those for traditional or even subprime auto loans.

Rental requirements for owning cars

Vehicle hire-purchase or hire-purchase is offered by dealerships with internal financing. However, it’s important to remember that a hire purchase agreement is not a loan. A lender does not give you money to pay for the vehicle.

Instead, the dealership determines how much you have to pay to officially own the vehicle, and then you make weekly, bi-weekly, or monthly payments. All of your installments and payments are made at the car’s selling price, but some dealerships may require a large end-of-period payment. Once you’ve paid everything you owe, you own the vehicle!

To qualify for a lease to own a car, you generally must meet the following requirements:

  • Have a valid driver’s license
  • Provide proof of income, usually 30 days of computer generated check stubs
  • Proof of residency is also required and can usually be satisfied with a recent utility bill in your name
  • Have a deposit; the amount required usually depends on the vehicle.

You may have noticed that there was no credit score requirement listed. This is because BHPH dealers who offer hire purchase agreements can skip the credit check! For borrowers with poor credit, leasing a car can be the way to get the vehicle you need.

Vehicle rental details

The goal with a rental car is to own it at the end of the day. The dealer holds the title until you have paid everything and at the end of the term it is entirely yours. Most hire-purchase contracts typically last between 12 and 36 months.

BHPH dealerships that extend the rent to their own agreements only sell used vehicles and are usually independent owners.

With a car rental contract, you are responsible for making every payment on time and maintaining auto insurance. Repairs, regular maintenance, and anything associated with vehicle ownership are also your responsibility.

If you break the rental agreement, either by canceling auto insurance coverage or missing payments, it could mean that you are no longer eligible to purchase the car. It depends on the language of the rental agreement, so be sure to read everything carefully to know what you are getting into. Some BHPH car lots can deactivate your vehicle remotely if you are behind on a payment, and can even begin repossession immediately.

Hire purchase agreements are attractive to many borrowers with credit problems. Since BHPH dealers may not check your credit, this is a decent automatic option to explore when your credit score is low. However, without a credit check, there may also be no credit repair opportunities.

If a dealership doesn’t report rent to their own contract or your payments on time, you’re not improving your credit score. Payment history is the most important factor in your overall credit score.

Don’t be afraid to ask questions about the details of your hire purchase agreement and their credit practices.

Other automatic options for bad credit borrowers

If repairing your tarnished credit history is a priority for you, then a subprime auto loan may be for you. These lenders are registered with special financial concessions and specialize in assisting borrowers with poor credit. Borrowers with recently discharged bankruptcy, vehicle repossession, no credit, or past credit problems can often be eligible for these auto loans if they meet the conditions.

Subprime lenders check your credit, but this is not the determining factor in your overall eligibility for auto loans. If you’re approved and stay up to date on car payments, your payments can help boost your credit score.

Need a car but your credit is in the way?

Having a lower credit score can be a barrier to your next car purchase. however, Express auto loan wants to help you get to a vehicle!

Using our nationwide network of specialty finance dealers and in-house finance dealers, we’ll search for one in your area for free and with no obligation. Get started right away by filling out our auto loan application form.



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