Most South Africans, once they have found their ideal motor vehicle, will apply for vehicle finance with their local bank. If successful, the bank pays the dealership for the vehicle and you pay-off the Finance Loan over 5 years with a reasonable interest or profit paid to the bank.
Once you have paid for the car in full, you are the full title holder and owner. This has worked with reasonable success for many decades, however times have changed.
Being approved and being seen as credit worthy by the banks is becoming more and more difficult.
This growing problem of less people being approved, yet more and more people requiring vehicles has reached a ‘tipping point’.
A tipping point is defined as “a series of small changes or events that collectively become significant, causing a critical, larger shift and change in direction.”
South Africa has reached this tipping point, as the established financial institutions are no longer able to serve or do business with large percentages of the South African public. Of the 25 million credit-active South Africans, less than 10 million are considered credit worthy!
Yet, the need for credit and especially credit for vehicle financing is still a real reality.
The language often used to describe those not qualifying for credit is ‘Blacklisted’. The more legally accurate terminology is ‘not Credit worthy’.
The SA debt hole is now deep and the financial system is like loose sand, making it hard for even the diligent to climb out.
These factors have led to the ‘Rent to Buy’ model as a viable motor vehicle solution for the everyday South African.
The correct legal term would be 'long term lease' or 'rent of vehicle with option to buy'.
This seems just a play on words, however terminology determines practice, and practice can determine if a business is illegal or legal. With this said, long term rental with option to buy is revolutionary and has opened doors, providing transport for many. From the first-time motor vehicle buyer, to the more seasoned, with extra earning power, but who have a low credit score.
Business owners are also viewed as high risk by the banks and find the ‘rent to buy’ model very accommodating and effective.
RentaDeal, birthed out of this ‘tipping point’ provides a legal, long–term cost effective motor vehicle rental alternative with the option to buy.
Own your ride,
See the future and act.