15 January 2024
You’re hustling hard as a rideshare driver, and owning a reliable car is key to your income. But traditional financing feels out of reach with your credit score. Rent to own (RTO) programs suddenly sound tempting – finally, a chance to ditch the unfair rental fees and cruise in your own set of wheels!
Hold on a minute, though. Before you sign that hefty contract, let’s peel back the shiny RTO veneer and examine the reality beneath. Is it truly ownership, or a slow ride down a financial rollercoaster?
Rent-to-own car plans dangle the carrot of car ownership without the initial loan headache. Weekly payments feel manageable, and the “own it in X years!” tagline seems like a sweet deal.
But what’s hiding in the fine print?
Depreciation Dilemma: You’re paying for a brand new car at first, but by the time you “own” it, years of mileage and depreciation have slashed its value but your weekly fee remains the same. When you finally own your car after a four-year term, it will have around 156,000 kilometres on it (if you drive an average of 750km/ week).
Predatory Pricing: Those seemingly low weekly payments add up. Compare the total RTO cost to traditional financing for the same car – you might be surprised how much more you’re paying for the “renting” privilege. For example a 2023 Hyudai Tucson has a driveaway cost of $ 45,000 on a 4-year Rent-to-own plan at $350/ week you will end up paying $ 72,800. In the case of a 2023 MG4 EV, you will end up paying $ 74,800 for a car with a driveaway price of $ 47,000.
Hidden Fees: Administration fees, early buyout penalties, and “mystery wear and tear” charges can turn your manageable payments into a financial abyss.
Not Your Car Yet: Remember, you’re essentially a long-term renter until that final payment. Late payments, accidents, or exceeding mileage can put your “ownership” on shaky ground – repossession looms large.
Stuck in a Rut: RTO contracts are notoriously hard to escape. Long minimum terms, hefty exit fees, and limited car options make switching cars or ditching the program a costly nightmare.
Transparency Takes a Backseat: Those contracts can be dense and confusing, with key terms buried deep. Early buyout options often only appear within the final year, and $1 balloon payment can be anything but celebratory with payments taking other forms and names.
Car Subscriptions: Services like Karmo offer all-inclusive weekly fees covering registration, insurance, and even maintenance. You drive a new car, avoid depreciation worries, and enjoy flexibility, all for potentially less than RTO costs.
Personal Loans: With some effort, you might secur a personal loan with better interest rates than RTO, giving you true ownership and freedom of choice in car selection.
Rebuild Credit: Invest in improving your credit score. Even a modest bump can open doors to more affordable traditional financing options
Rent-to-own might seem like a shortcut to car ownership, but the hidden costs, limited control, and potential financial traps can turn it into a bumpy and expensive ride. Explore alternative options, compare costs carefully, and prioritize true ownership over the illusion of control. Remember, the open road shouldn’t lead to financial dead ends. Car subscriptions are customer focussed and offer peace of mind with all-inclusive weekly plans.
Before you sign a Rent to own contract, compare all your options and prioritise financial security. Check out rideshare plans from Karmo which start as low as $ 235 as a flexible affordable alternative – your dream car might be closer than you think, without the Rent to own rollercoaster!