At times buying big ticket products, e.g. furniture or computers may not fit into your tight budget or timeline. But you don’t have to fret now that lease purchases are now available. The lease to purchase allows you to lease an item, with an option to buy, for an affordable weekly, bi-weekly or even monthly payment. In a nutshell, you only need to pay a processing fee. No credit or down payment is required which makes it a more accessible option for those that find it hard to access loans with a poor credit score or a fluctuating income history.
How a Lease Purchase Works?
In a lease purchase also referred to as “rent to own agreement,” you discuss and agree on a weekly, fortnightly or per month payment plan for the commodities. You’re are expected to sort each payment as arranged and have the free will to end the agreement by returning the product to the merchant or leasing company at the end of any sporadic lease term, which should last two months or less. If you go on making payments as per the contract, you can choose to buy the product under the terms of the agreement.
What’s more, merchandise is available almost immediately and can be quickly delivered to you making it a suitable option for must-have household items. Also, it’s relieving to let you know that the merchant or leasing company will sort out repairs or replacements if the product breaks while you are making payments. But don’t forget to check your contract for exact details.
Elements of a Lease Purchase
While lease to purchase agreements come with flexibility in the terms of agreement, here are standard things to keep in mind.
Cash Price- What’s the cash price for the product?
Lease Option Fee- What’s the cost of leasing the merchandise?
Total Price- What’s the cost of cash price plus lease option fee?
Option Period- the duration of the lease purchase contract.
Terms & Conditions of purchase
Late Payments- What happens in case of a late or missed payment?
Advantages of a Lease Purchase
Below are the reasons you should go for a lease purchase agreement rather than other financing plans.
- No Repairs or Maintenance costs- The leasing company takes care all repair and maintenance costs during the contract period.
- A test run- you get to try an item before you choose to buy it permanently.
- No credit needed- You get what you want even with bad credit. And if you pay on time, your scores could be boosted.