Hidden Costs in Rent-to-Own Car Finance

Rent-to-own car finance allows you to drive a new car without needing a big deposit or a strong credit history. This choice can be good if you are on a tight budget or have poor credit histories.

Rent-to-own deals might look easy, but they can come with hidden fees. These fees can make owning a car more expensive than you think. Costs such as balloon payments, mileage limits, and maintenance fees can all add up. It’s important to be aware of these extra costs when considering rent-to-own car finance.

Why People Choose Rent-to-Own Car Finance

• You don’t have to worry about a big deposit.
• We help you get approval even if you have bad credit or poor credit.
• Our terms are flexible to meet your monthly payment needs.
• At the end of the agreement, you can own the vehicle.
• You can drive a range of vehicles, like spacious SUVs and small cars.
• It’s fine if you don’t have strong credit or perfect credit scores.

Fact: The Financial Conduct Authority (FCA) reports that over 25% of people in the UK who get car finance have a subprime loan.

Common Hidden Costs in Rent-to-Own Car Deals

Renting to own might sound great at the beginning, but it’s important to read the details carefully. Here are some typical hidden costs:

• Mileage limits: Most offers let you drive between 10,000 and 15,000 miles each year. If you drive more, it might cost you 5p to 15p for each extra mile.
• Road tax: Some companies include this in the price, but others ask you to pay it yourself.
• Maintenance plan: You may have to pay for service and repairs if they aren’t covered by the plan.
• Balloon payment: At the end of the rental term, you might need to make a final lump sum payment to finish the purchase price.
• Late payment fees: If you miss payments, you could face extra charges and it might hurt your credit history.
• Wear and tear charges: You may face additional fees for damage that is more than normal wear and tear.

Fact: MoneyHelper states that fees for wear and tear can be between £200 and £500 if the car is returned with any damage.

Example: Real Costs for Popular Rent-to-Own Cars

Prices are from 08/04/2025. Real numbers may vary depending on the provider, mileage, and terms of the agreement.

What Happens at the End of the Agreement?

At the end of the rental term, you will have different options to pick from.

• Buy the car: If you need to, make the final balloon payment.
• Return the car: Some rent-to-own plans allow you to return the car without paying any extra costs.
• Upgrade: Start a new agreement for another vehicle.

Make sure you understand what will happen at the end of your agreement or the end of the lease before you sign.

How Rent-to-Own Differs from Traditional Financing

Hidden Fees Compared to Leasing Deals

Personal contract hire (PCH) and personal contract purchase (PCP) leasing deals might have some hidden costs. You could be surprised by these costs.

• You will pay for any extra miles you drive at the end of the lease.
• There are fees if the car gets damaged or shows wear and tear.
• If roadside assistance is not included, you will have to cover those costs.

You need to read the terms in the rent-to-own and leasing agreements carefully. This will help you avoid any extra charges.

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Tips to Avoid Hidden Costs

• Read the full agreement terms: Make sure you know the purchase price, maintenance needs, and the credit check process.
• Ask about balloon payments: Find out the total cost of owning the car when the lease finishes.
• Check if roadside assistance and maintenance are part of the deal.
• Stick to mileage limits to avoid extra charges.
• Choose flexible terms that fit your monthly budget and driving needs.
• Provide proof of identity and income if needed to get better deals.

Fact: Financial institutions often require you to provide proof of identity and proof of address. This is usually needed, even when it comes to car financing agreements for people with bad credit.

Is Rent-to-Own the Best Deal for You?

Rent-to-own car finance can be the best deal if you:

• You need payment plans that fit your tight budget.
• You have a bad credit history or poor credit.
• You want to own a car without using traditional loans.
• You prefer small monthly payments rather than big deposits.
• You need your dream car but cannot pay a lot upfront.

Remember that traditional financing or a car loan might be cheaper in the long run if you have a strong credit history.

FAQs About Hidden Costs in Rent-to-Own Car Finance