Rental-to-own programs give consumers the opportunity to rent an item for a fixed number of months, with the option to purchase at any point during that period. Your monthly rental payment includes property taxes and insurance as well as rental maintenance and other fees for upkeep.
It’s important to note that your monthly payments are not considered purchases at this time, which means you’re not eligible for tax deductions. That’s because you’re not actually buying the item. Instead, you’re paying a down payment (usually 5% to 10% of the full purchase price) that allows you to use the property in question until the rental contract expires, at which point you have the opportunity to buy it for a discounted price.
Rental-to-own programs are often used by consumers who need flexible arrangements or those who would like to avoid credit checks and qualifying standards. On the other hand, it’s also used by sellers who need a way to make sure their items will be taken care of and by companies that want a steady stream of income while they sell their product.
How does rent to own work for business?
If you’re marketing a rental property or have a product that could lend itself to the flexible rental system, it may be advantageous for you to consider using a Rental-to-Own Program.
A good way to get started is to find out how much your item will cost before going through the program. That way, you’ll know exactly what your monthly payments will look like when all of those taxes and maintenance fees are taken into account. You may also want to think about how long you expect it will take you to sell that item, and choose an expiration date accordingly.
It’s also important to understand how your rental payments work. Will they be held in an account somewhere, and will you get access to that money at a later point, or is the full amount going straight to the seller? If you think you might want to buy the item before the contract expires, make sure that you’ll have access to that money if need be.
In some cases, it can make sense to extend a rental-to-own program over a longer period of time. That way, sellers may be able to create larger down payments or allow for more time for consumers to pay off their purchase price. Make sure that these agreements are clear before you sign on the dotted line (or click “I agree”).
You should also think about how long you expect your item to be rented. The goal is not to pay out as much money in rent as possible, but instead to make sure that you can afford the item when it comes time to purchase it (and that you don’t get stuck owing a significant amount of money).
By doing your research, you can avoid any possibility of being in over our heads and ending the rental agreement early.
Finally, be aware of those sales tax rules from before. There may be additional restrictions on items sold by way of a Rental-to-Own Program, so keep that in mind when you’re ready for your next purchase.