Rent to own car lots are another type of in-house financing dealership that offers no credit check auto loans. This makes them an option to get a car loan if you're dealing with bad credit or no credit. Because rent to own dealers finance their vehicles in-house, they usually have different requirements to get approved than special finance dealerships.
How Rent to Own Car Purchases Work
Rent to own car purchases work similarly to the auto loans offered by other in-house financing dealers, like buy here pay here dealerships. You take out a loan directly with the dealer you're buying the vehicle from, and you agree to make payments for a fixed term and then own the car outright at the end.
These loans are designed for people who need a vehicle but are facing credit issues. These dealerships typically don't run credit checks, so they won't care if you have bad credit, negative information on your credit reports, or no credit altogether. If you want to get a car quickly with no credit check, a rent to own dealer may be right for you.
Rent to Own Car Loan Requirements
What do rent to own dealerships require to get approved? Instead of basing approval on your credit score and history, they use your income to qualify you.
The specifics vary, but rent to own dealers generally require a minimum monthly income of $1,500 to $2,000 before taxes. It can be from one or more jobs, or even sources of unearned income like Social Security or disability. These dealerships aren't concerned about where your income comes from like special finance dealers are.
However, these dealerships usually do require proof of income. You should bring in a copy of a recent computer-generated pay stub showing your year-to-date earnings if you're a W-2 employee, two years of recent tax returns if you’re self-employed, or documents that prove your unearned income if you have it, such as an award letter if you’re on disability.
Rent to own dealers also typically require a down payment in order to approve you. Bad credit lenders generally require a minimum down payment of $1,000 or 10% of the vehicle's selling price, but this can vary more widely at rent to own dealerships. The required amount of money down is usually based on the car you choose, and it may be higher than what other bad credit lenders ask for.
Why Subprime Lending May Be Better
Rent to own vehicle purchases can be great if you’re looking for fast auto financing with no credit check. But if credit building is a top priority, you may want to consider getting financing from a subprime lender instead.
Because rent to dealers typically don't look at your credit, they may not report your loan or on-time payments to the credit bureaus. This means that all of your timely loan payments won't improve your credit score.
Subprime lenders, on the other hand, check your credit and report loans and on-time payments to the credit bureaus, which gives you a chance to improve your credit.
Subprime lenders can also be seen as a better option because they may not have as large of a down payment requirement. This may be easier on you if you’re on a tight budget or don’t have a trade-in to use as a down payment.
The Bottom Line
Rent to own car purchases can be great for buyers with bad credit or no credit. Your credit doesn't play a role in whether or not you can get approved, it all depends on if you have the income to qualify. However, subprime lenders are generally a better option because they always offer the chance to improve your credit score through timely loan payments.
Auto Credit Express can match you to a local special finance dealership to help you get your next auto loan. We're teamed up with a nationwide network of car dealers that includes both rent to own dealerships and special finance dealers. They have the lending resources available to assist people in many types of credit situations.
Let us point you toward a dealership in your area that can help. Simply fill out our no-obligation auto loan request form to get the process started today!