Debunking common lease-to-own financing myths – with the truth

Thinking about lease-to-own financing? This blog debunks the most common myths about lease-to-own financing. Here are the key takeaways.

• Lease-to-own is a way to get essential items now and pay later.

• You can obtain ownership once your lease agreement is complete.

• Lease-to-own can help people with low or no credit get what they need.

• The ability to pay over time outweighs the higher total cost for many households.

When the cost of a big-ticket item is higher than budgets allow, people often look for options that can help them get what they need quickly, then make payments over time. For many shoppers, that option is lease-to-own financing.

But there are many common lease-to-own financing myths that can stop consumers from using this type of financing. Here’s what you should know about lease-to-own financing.

Lease-to-own financing is a convenient way to pay over time for big-ticket essential items such as tires, furniture, appliances, and mattresses. This type of financing is typically available to more consumers, including those with low credit scores or no credit.

That’s important, because people with challenging credit histories often have trouble getting traditional financing. Recent research from Snap Finance found that among those with credit scores below 670, 78% have been turned down for financing.

Snap Finance is a leading provider of lease-to-own financing. How does it work? In a lease-to-own agreement with Snap Finance, Snap purchases the merchandise from the retailer and then leases the merchandise to the customer.

As part of the agreement, customers make payments over time to Snap. Once customers have made all their payments and completed the terms of their lease agreement, they obtain ownership of the merchandise.

Despite its advantages, many myths and misconceptions about lease-to-own financing can discourage shoppers from using it to get what they need. Let’s break down some of those lease-to-own financing myths with the truth.

Myth 1: Lease-to-own financing is too expensive

Truth: The total cost of a lease, including the cash price of the item plus a fixed cost of lease, will often exceed the item’s original cash price. However, lease-to-own financing breaks the cost into smaller payments that may be a better fit for your financial situation. For many households, the ability to pay over time is more manageable than paying the full amount upfront.

Here’s an example with Snap’s lease-to-own financing. Let’s say you need a new sofa and you select one that’s $1,500. Using Snap, you could pay around $200 per month for Snap’s maximum term of 18 months.¹ Or you could choose an early ownership option to save significantly on lease costs.1 Snap’s multiple ownership plans are designed to fit individual needs. Those plans may affect overall costs and payment amounts.

With Snap’s lease-to-own financing, there’s zero payment due at signing for most customers. However, there may be a processing fee or initial payment due the day you complete your transaction, depending on where you’re shopping. Check your lease agreement for specifics.

Lease-to-own financing allows you to get what you need immediately, instead of waiting months to save for a large purchase. It also helps shoppers with tight budgets or credit challenges get merchandise that might otherwise be out of reach. While the total cost can exceed the original item price, the added convenience may make lease-to-own an option worth considering for you.

Myth 2: If you lease, you never actually own the item

Truth: This is one of the most common lease-to-own financing misconceptions. With a Snap lease-to-own agreement, ownership is straightforward. Snap purchases the item from the retailer, and you lease it from Snap. Once you’ve completed the terms of your lease agreement, you obtain ownership of the merchandise.

Snap also offers early ownership options. Payments for Snap’s lease-to-own financing are automatically set up to align with your paydays for the maximum length of the lease agreement.¹ If you would like to change how often you make payments on your account or choose an early ownership option, you will need to contact Snap Finance.¹

To choose an early ownership option, customers must make all regular payments on time and schedule additional payments in the Customer Portal or by contacting Customer Care at 877-557-3769.

Here’s an example to illustrate how ownership works. Let’s say you use lease-to-own to get a dishwasher. If you make all regular payments on time and complete the terms of your lease-to-own agreement, you take ownership of the dishwasher. Even though you’ve been using the appliance since you brought it home, you obtain ownership when you complete the terms of your lease agreement. Lease-to-own financing is not perpetual “renting,” but a way to eventually own an item.

Learn more about leasing vs. purchasing an item.

Myth 3: Lease-to-own is a scam or predatory

Truth: When administered properly, lease-to-own financing programs are not scams. They are legal, regulated agreements backed by formal contracts with clear terms. Snap Finance ensures transparency in all stages of the process, starting with explaining costs upfront in the lease agreement.

Snap provides fee disclosures in their lease agreements. Customers receive all relevant information before signing. Snap doesn’t charge cancellation or late fees.

And typically, lease-to-own agreements can be cancelled. For example, Snap includes provisions in their lease agreements for customers who may need to cancel their commitment. If at any time you’re not able to make more payments, Snap helps you turn in your merchandise. You must contact Snap to begin this process.

How to contact Snap Finance:

• Call 877-557-3769

• Go to the Customer Portal: customer.snapfinance.com

When looking at leasing options, it’s important that you feel comfortable with the terms of the agreement. Carefully read your lease agreement so you can make an informed decision. And make sure you get answers to any questions you have before you sign an agreement.

Myth 4: Lease-to-own is only for people with no credit or bad credit

Truth: Lease-to-own financing is often associated with customers who have no credit or poor credit history, but this assumption doesn’t tell the whole story. While lease-purchase, rent-to-own, and lease-to-own financing programs are an excellent option for those who may struggle to qualify for a bank loan or other traditional financing, they are available to everyone.

With Snap Finance, all credit types are welcome to apply.² That inclusivity is part of its appeal –not requiring a higher credit score or co-signer makes lease-to-own more convenient for more people. And while it’s true that people with bad credit benefit significantly from having an alternative financing method, those with good credit often use lease-to-own programs for their added flexibility.

Traditional financing looks primarily at your credit score when you apply. But Snap looks at multiple data points to determine your creditworthiness. That could mean that even if you’ve been turned down for traditional financing because you have have less-than-perfect credit, you may be considered for Snap’s lease-to-own financing.²

Keep in mind that Snap always checks credit. But because Snap’s application results are not based on credit alone, customers can be approved even with poor credit or no credit.² Of course, not all applicants are approved. While no credit history is required, Snap obtains information from consumer reporting agencies in connection with applications and score with those agencies may be affected.

Remember, lease-to-own isn’t just for those with low credit or no credit; it can be for anyone who needs fast access to big-ticket essential items.

Myth 5: I’m paying hidden interest or will lose everything if I miss a payment

Truth: The cost structure for lease-to-own financing is different from traditional loans. Instead of charging interest, lease-to-own financing uses a predetermined cost of lease on top of the item’s original price.

Cost of lease is the charge for leasing merchandise. Sometimes called a factor rate, it is figured as a percentage of the total cost of the leased merchandise. If you use Snap’s lease-to-own financing, this cost of lease is fully disclosed in your lease agreement.

For Snap’s lease-to-own financing, the consequences for missing a payment are also clearly outlined in your lease agreement. And under the terms of the lease agreement, you can end the lease-to-own agreement by surrendering the merchandise. Check your lease agreement for complete information and instructions.

Transparency is a key priority for Snap Finance. They encourage every customer to carefully review their lease agreement before signing to help ensure there are no surprises along the way.

Separating fact from fiction

Lease-to-own financing myths often stem from misunderstandings about how it works. Separating fact from fiction helps provide clarity – and helps customers make more informed choices. Whether you’re trying to manage a tight budget or find an alternative to traditional financing, lease-to-own financing can offer the convenience and accessibility you need.

The advertised service is a lease-to-own agreement provided by Snap RTO LLC. Lease-to-own financing is not available to residents of Minnesota, New Jersey, and Wisconsin.

¹The default payment plan is the Maximum-Term Plan, which includes 12- to 18-month renewable terms and is your highest cost option. To exercise an early ownership option, including the 100-Day Option, customers must make all regular payments on time and ensure the required amount is paid within the applicable timeframe via the customer portal or by contacting Customer Care at 1-877-557-3769. The 100-Day Option may include a cost of lease above the merchandise price.

²Not all applicants are approved. While no credit history is required, Snap obtains information from consumer reporting agencies in connection with applications, and your score with those agencies may be affected.