The idea of renting something rather than buying it seems to go in phases. There was a time when people rented TVs and radios, but as prices got lower and incomes improved, that became unnecessary.

With a vehicle, though, it is still quite a financial undertaking. Cars cost a lot of money, and after the initial cost of actually buying one, there is all the maintenance, servicing and dealing with issues that occur with any vehicle that has ever been made.

The Fundamental Difference: Equity vs. Pure Rental Cost

One major factor here is the same as you get with renting rather than buying a property. If you own something, you have something to sell. Equity is the value of the item minus any money you may still owe on it. With a vehicle, if you paid cash for it, you have 100% equity. But if you are paying instalments, the equity is the resale price minus what you still owe.

Pure rental cost is something many people don’t even think about. It means the total of all your rental payments over perhaps years, taking into account that you still don’t own the vehicle at the end. What might be called a happy medium is the rent-to-own system, whereby you do own the vehicle at the end of the contract.

Hidden Costs in Long-Term Rental Contracts

A long-term vehicle rental does not free you from financial worries regarding your car. For instance, there might be high charges for wear and tear or for early termination of the contract. An additional irritation might be restricted mileage, so you can’t just jump in the vehicle and drive off wherever without looking at the odometer (AKA milometer) and maybe finding you can’t do it.

That’s because a rental company is going to pass it on to another renter or sell it, so they don’t want the vehicle damaged, and they don’t want the higher mileage, which will affect resale value.

No Mileage Limits: A Key Advantage of Rent-to-Own

The restricted mileage issue mentioned above is typically not present in a rent-to-own agreement, but make sure you double-check the contract or check with the RTO company to make sure. With RentBuyIt, there are no kilometre limits, so there’s no limiting your driving freedoms either!

Flexibility vs. Ownership: Aligning the Option With Your Goal

RTO contracts offer a degree of flexibility that straightforward ownership does not. You own the vehicle in the end without putting down a huge initial payment, and along the way, depending on the details of the contract, you may benefit from capped price servicing and roadside assistance.

The flexibility starts with the initial payment: it may be as low as a few hundred dollars, but if you can afford more, you may choose to make a substantial down payment in exchange for a shorter contract period. In this way, you can reduce the overall cost. The thing to do, then, is to determine what you aim to achieve and choose the option that will help you reach that goal.

Why Long-Term Rental Payments are a Perpetual Expense

Long-term rental can be the answer in certain circumstances, such as if you have bad credit car finance challenges, but if you are accepted, you have to factor in the continued payments along with your other outgoings, with no fixed date for them to stop. With RTO through RentBuyIt, you’ll have a cut-off for those payments, and you’ll also end up with an asset you can sell and upgrade in future. We help customers across Australia, including those in Melbourne, Brisbane, Adelaide, and the Gold Coast.