Spelling: lease to own
What Is Lease To Own?
A lease-to-own agreement lets you lease a car with the intention and often the option to buy it later. Unlike a traditional lease, where you return the vehicle, a lease-to-own plan builds toward ownership, either through a final buyout or by rolling lease payments into the purchase.
This setup is sometimes called “lease-purchase” or “rent-to-own,” especially in used vehicle or subprime financing scenarios. It can be a helpful alternative for buyers who want to own but need lower payments upfront or don’t yet qualify for traditional auto loans.
How Lease-To-Own Works
In a lease-to-own arrangement:
- You sign a lease agreement with monthly payments over a set term (typically 24–48 months).
- The contract includes a purchase option, usually at a pre-agreed price or the car’s market value at lease end.
- Some dealers or lenders may apply a portion of your lease payments toward the purchase price.
- At the end of the lease, you decide whether to return the car or buy it.
Important: These programs vary widely. Some are structured like standard leases with residual values; others have less consumer protection and fewer cancellation options.
Lease-To-Own vs. Traditional Lease
| Feature | Lease-To-Own | Traditional Lease |
| Ownership | Option or plan to own | No ownership unless buyout |
| Monthly Payments | Often higher than standard lease | Typically lower |
| Down Payment | May be required or rolled in | Usually minimal |
| End of Term | Buyout expected or encouraged | Return, buy, or re-lease |
| Consumer Profile | Often used by credit-challenged buyers | Popular with prime borrowers |
Pro tip: Always ask whether your payments are building toward ownership or just covering use of the vehicle. Not all “lease-to-own” deals mean you’re gaining equity.
When Lease-To-Own Makes Sense
A lease-to-own program may be a good fit if:
- You want to own the car eventually, but need time to improve your credit
- You can’t qualify for an auto loan yet, but need reliable transportation
- You’ve already been leasing the car and want to transition to ownership
- You prefer predictable payments and a familiar vehicle
Example: A customer leased a used SUV through a lease-to-own plan. The contract allowed the customer to buy the car for $12,000 after 36 months. Because he kept the car in excellent condition and used the time to improve credit, he financed the buyout at a lower interest rate and avoided dealership markups.
Risks and Considerations
- Higher total cost: You may end up paying more than if you’d bought the car outright.
- Limited flexibility: Early termination can be tricky or expensive.
- Unclear terms: Not all lease-to-own programs clearly define how payments apply to the final price.
- Less regulation: These agreements may not offer the same consumer protections as standard leases or loans.
Pro tip: Review the purchase option terms carefully. Ask if any portion of your monthly payment goes toward the purchase price or if it’s strictly rental.
Related Terms in Lease To Own
- Previous term: Lease Term
- Next term: Lessee
- Also related: Lease Buyout, Residual Value, Rent-to-Own, Subprime Auto Financing