Rent-to-buy lets you rent a car and own it later. But is it worth it? Here’s what you need to know, plus cheaper alternatives to consider.
If you need a car but don’t have the cash for a deposit or can’t get approved for finance, you’ve probably come across rent-to-buy. It sounds simple enough – you rent a car, make monthly payments, and eventually, it’s yours.
But is it really that easy? And more importantly, is it a good idea? Let’s break it down.
What is rent-to-buy?
Rent-to-buy is exactly what it sounds like: you rent a car with the option (or sometimes the obligation) to buy it at the end of the rental period.
It’s similar to leasing, but with one key difference – you’re not just paying for the use of the car. Your payments go towards eventually owning it.
Here’s how it usually works:
- You sign an agreement to rent the car for a fixed period (typically 12–60 months).
- You pay a set monthly rental fee.
- At the end of the term, you either own the car outright (if your agreement includes automatic ownership) or pay a final lump sum to take full ownership.
It’s an option that gives you access to a car without needing a massive deposit or a perfect credit score. But like anything, it has its upsides and downsides.
Pros of rent-to-buy
No big deposit needed
One of the biggest perks is that you don’t need a large upfront payment. If you don’t have savings for a deposit but need a car ASAP, rent-to-buy could be an option.
Easier approval
Getting approved for a rent-to-buy deal is often easier than applying for a car loan. Many companies don’t even check your credit score, making it an option if you're self-employed, don’t have a credit record, or are under debt review.
Fixed monthly costs
You’ll know exactly how much you’re paying each month, which makes budgeting easier. Unlike traditional car loans, where your repayments change with the interest rate, your payments stay the same.
Flexibility to walk away
Some rent-to-buy agreements let you return the car if your circumstances change. You won’t get your payments back, but it’s a way out if things don’t go as planned—without any mark on your credit record.
Maintenance and insurance costs bundled in
With rent-to-buy, maintenance and insurance costs are often included in your monthly payments. While this can be convenient since you don’t have to worry about separate bills, in many cases, you might get a better deal by arranging insurance and maintenance yourself. It’s worth checking the numbers to see if the added convenience is really worth the extra cost.
Cons of rent-to-buy
It’s more expensive in the long run
Convenience comes at a price. Rent-to-buy is usually more expensive than bank financing or buying a car outright. You’re paying both rental fees and part of the car’s value, with higher monthly costs to cover the risk of not completing the purchase. Some deals also include maintenance and insurance, making payments even higher.
Limited car choices
You won’t get the same variety of cars as you would with traditional financing. Rent-to-buy options are often used cars or specific models chosen by the provider.
You might need a final balloon payment
At the end of your rental term, some agreements require you to pay a lump sum to take ownership. If you’re not prepared for this, you could be in a tough spot.
You don’t own the car until the end
Until you’ve made all your payments (or covered the final lump sum), the car isn’t technically yours. This could mean restrictions on what you can do with it.
Should you go for rent-to-buy?
Rent-to-buy might make sense if:
- You don’t have savings for a deposit but need a car quickly.
- You struggle to get approved for traditional finance due to your credit score or employment status.
- You want predictable monthly payments and don’t mind paying more for the flexibility.
However, if you have a good credit score or can save up a deposit, other options will likely cost you less in the long run.
What are the alternatives to rent-to-buy?
Vehicle finance (car loan)
If you can qualify for a car loan, this is usually a cheaper way to own a car. You’ll have lower repayments than rent-to-buy, and once you’ve paid it off, the car is yours.
Leasing
If you’re not dead set on owning a car, leasing lets you drive a new model every few years. Just keep in mind that at the end of the lease, you won’t own the car.
Buying a second-hand car
If you’ve got some savings, buying a used car outright can be a better value-for-money option. No interest, no rental fees – just a car that’s yours from day one.
Where to find rent-to-buy cars in South Africa
If you’re considering rent-to-buy, here are some companies that offer it:
Rent-to-buy can work if you need a car but can’t get traditional finance. It’s flexible, doesn’t require a deposit, and is easier to qualify for—but it’s not the cheapest way to get a car.
Before you commit, compare your options, do the maths, and read the fine print.
And no matter how you get your car, make sure it’s insured. Whether you’re renting, buying, or leasing, you’ll need cover. With Naked, you can get a car insurance quote in under 90 seconds—quick, easy, and flexible.
