Caution urged on rent-to-own car finance

Last updated: 04 February 2025

  • Warning about the pitfalls of rent-to-own finance for used cars
  • Consumer stung $16,000 for 21-year-old car worth only $3,000
  • Advice to read contracts carefully and seek independent financial advice

Consumer Protection is advising caution over rent-to-own finance agreements for used cars, as they could end up costing consumers far more than the vehicles are worth.

Rent-to-own agreements involve making regular (usually weekly) payments to use a vehicle. At the end of the agreement and once the final payment is made, ownership of the vehicle is transferred to the customer.

However, a recent complaint involving a consumer who signed a contract for a 2004 Nissan Pulsar for a total of $16,380 – more than five times the typical purchase price – has raised concerns that some rent-to-own businesses may not be adequately informing consumers about the full financial implications of these agreements.

Other complaints highlighted issues such as vehicles with significant mechanical problems, failure to pay agreed-upon licensing fees, missing records of a paid deposit, and even the absence of a written contract altogether.

Commissioner for Consumer Protection Trish Blake urged used car buyers seeking finance to carefully consider rent-to-own agreements.

“Rent-to-own financing might seem appealing to those who struggle to obtain traditional loans, but consumers should review the terms of these agreements carefully,” Ms Blake said.

“It’s important that rent-to-own businesses transparently inform customers about the total cost of the vehicle, plus who is responsible for associated expenses like registration, insurance and servicing.

“Crucially, consumers need to know who is liable for potentially costly repairs on often older, high-mileage vehicles that may not remain roadworthy throughout the lease term.

“For guidance on these matters, consider consulting with a financial counsellor, who can offer free advice and explore alternative financing options tailored to your situation. Free legal advice may also be accessible depending on your situation.”

Contact details for your nearest financial counsellor can be found online. Free legal advice can be sought through Consumer Credit Legal Service WA.

Consumers who suspect they may have been misled about a rent-to-own car purchase agreement can lodge a complaint on the Consumer Protection website. For enquiries, call 1300 30 40 54 or email consumer@demirs.wa.gov.au 

          

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Media Contact: cpmedia@demirs.wa.gov.au