Rent-to-own Car Costs: Beyond Weekly Payments

A rent-to-own (more info) car payment calculator can help you work out if the payments on a rent-to-own car plan suit your budget and can show you the total cost of your agreement before you sign up.

When you’re looking to finance a new or used car, an affordable weekly car payment might seem like the perfect solution, especially if purchasing the car outright isn’t an option.

It’s easy to be attracted by the low weekly payments on offer with rent-to-own car finance options, but it’s important to look at the bigger picture and consider the total amount you’ll pay for your car over the entire agreement, not just the weekly or monthly instalments.

Payment Structure

Vehicle Price and Term

Depending on the calculator, you may need to add in the price of the car, whether you have made any sort of deposit and finally, the length of your agreement.

Shorter or Longer Terms

While it might be tempting to stretch the length of your rent-to-own car agreement in an effort to lower your payments, bear in mind that the length of your agreement will impact both your weekly payments and the total amount you’ll end up paying.

Shorter agreement terms will see:

• Higher weekly/monthly payments
• A lower total amount payable

Longer terms could mean that:

• Your immediate financial outlay will be lower
• You could end up paying more overall once all fees and charges are factored in

Before locking in on an agreement term, use a car payment calculator to compare and contrast the total costs over varying terms. Without a rent to own calculator, the agreement’s overall cost is harder to compare across terms. It’s easy to overlook that although a couple of dollars less per week doesn’t seem like much, in the long run, it could see you paying significantly more for your vehicle.

Ownership Costs

It’s important to use a car payment calculator to get an indication of what your finance payments might look like, but don’t forget that servicing your car is only one aspect of motoring.

Other costs you may want to factor into your vehicle budget could include:

• Fuel/electricity
• Parking/tolls
• Registration/licensing
• Car servicing/tyres/brakes/repairs
• Excesses (where applicable)
• Car washes

Before using a rent-to-own car payment calculator, take the time to look over the small print of your finance agreement to gain a clear understanding of what’s included in your regular payments and what isn’t. Some agreements include:

• Optional additional products/protections
• Establishment fees
• Account service fees
• Late payment fees

Total Cost of Ownership

When comparing different rent-to-own car payment options, it’s a good idea to use a payment calculator to compare and contrast what your total cost of ownership could be.

While the deposit you put down (or the amount of your trade-in vehicle, if applicable) could affect the size of your instalments or the length of your agreement, make sure you’re aware of the offer you’ve been given for your trade-in and get this in writing.

Some rent-to-own car finance agreements include a balloon/residual/final payment at the end of the agreement – check https://www.investopedia.com/terms/b/balloon-payment.asp for more details. These can significantly lower your regular payments, however, it’s important to consider how you’ll be able to make this potentially substantial payment at the end of your agreement. If you do have a final payment to make, try and factor this into your payments from the get-go.

Rent-to-own car payment calculators can be a helpful tool for comparing and contrasting agreements, however, it’s important to consider your wider household budget before jumping in with both feet. Toybrids operates in this part of the vehicle-finance market, where affordability involves more than predictable car payments. After all, car payments are pretty predictable, but other bills aren’t always as regular!

Vehicle Fit

Once you’ve established that your new ride is affordable, it’s time to consider if the car itself is right for you. For some people, that might be a car that swallows the school run, the commute and the occasional weekend away with ease. For others, a vehicle that’s rarely used for more than a trip to the shops may be just right.

Rent-to-own car agreements often include distance limits/conditions of use, so make sure you’re aware of these before you sign on the dotted line, as going over your agreed distance allowance could result in extra charges or affect your end-of-agreement options.

Some rent-to-own car agreements also include servicing and repairs conditions, such as servicing at authorised service centres or keeping detailed records. Failure to abide by these conditions could affect your end of agreement options, and ignoring your car’s service needs could result in costly and avoidable repairs further down the track.

Final Checks

Before you sign on the dotted line, make sure that you:

• Can still comfortably manage your day-to-day expenses and cater for unexpected expenses like car repairs
• Have considered all of the costs associated with owning and driving a vehicle, not just your finance payments
• Are aware of any distance limits, servicing requirements, and end-of-agreement conditions.

Use a pessimistic view of your finances/budget where possible, and when in doubt, ask!