1. What is Rent-to-Buy?

Rent-to-buy (also called lease-to-own) is an agreement where you rent a property with the option to buy it at the end of the rental period. Part of your monthly payment may go toward the eventual purchase price.

2. How Does the Calculator Work?

The calculator uses the rent-to-buy formula:

Where:

• \( Purchase\ Price \) — Total cost to buy the property
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of months in the agreement

Explanation: This calculates the fixed monthly payment needed to pay off the purchase price over the term at the given interest rate.

3. Importance of Rent-to-Buy Calculations

Details: Understanding your monthly payment helps compare rent-to-buy agreements with traditional mortgages or rentals, and ensures the terms are affordable.

4. Using the Calculator

Tips: Enter the total purchase price, monthly interest rate (e.g., 0.005 for 0.5%), and term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is rent-to-buy different from a mortgage?
A: Rent-to-buy typically has higher interest rates and shorter terms than mortgages, but may require less stringent credit checks.

Q2: What's a typical interest rate for rent-to-buy?
A: Rates vary but are often higher than mortgages, typically 6-12% annually (0.5-1% monthly).

Q3: Can part of the rent apply to the purchase?
A: Some agreements apply a portion (e.g., 25%) of each payment toward the purchase price - this calculator assumes 100% applies.

Q4: What happens if I don't buy at the end?
A: This depends on your contract - you may lose any equity built or have the option to extend the agreement.

Q5: Are there additional fees?
A: Many agreements include option fees or maintenance responsibilities - check your contract for all costs.