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7 Reasons the Rent to Own Model Rocks

October 28th, 2022

Make more profit than BHPH or retail sales with a Rent to Own model you can make much more profit than with a traditional BHPH structure.

There are a number of reasons for this.

Chief among them is that the ‘renter’ can return the vehicle at any time without penalty, and often does.

This means you keep the money you earned from the rental payments and have the ability to ‘sell’ the exact vehicle many times. And this is going to compound your profit margin with each turn.

1. Less Risk than BHPH

One of the most significant issues with BHPH dealerships is a liability. With the Rent to Own model, you retain ownership of the vehicle until the last payment is made. This means repossessing a vehicle is extremely easy as you are always the registered owner.

No more paying the repo man to hunt someone who ran off with a vehicle. That vehicle is considered stolen, and you can enlist the help of local law enforcement at no charge.

2. Steady Stream of Monthly Income

The Rent to Own model's payment structure is often weekly or bi-weekly. This means you have a steady stream of income all through the month. No more waiting until the first of the month!

3. Leverage over Delinquent Customers

You are the Titled Owner of the Vehicle! Your ability to compel a customer to pay their bill is powerful. As the title holder, you are the owner of the vehicle. This means that the customer is legally borrowing your vehicle until they decide to return it or you demand it back. You have complete control over your inventory at all times.

4. Protection from your Customer's Bankruptcies

If your customer is going through a financial hardship, you can help! With the Rent to Own model, your customer is never the owner. Therefore, bankruptcy and other financial arrangements cannot touch this asset. Technically you are the owner at all times.

5. Elimination of Costly and Time-Consuming Repossessions

You will not need the phone number of a repossession company with the Rent to Own model. As the owner, you can merely report the vehicle stolen after a specific time. Your tax dollars are paying for your ‘repo-man’ in this case, your local police department. This is a HUGE saving over the BHPH model.

6. Tax Advantages - Pay Income Tax as it's Earned

The government cannot tax you on perceived future earnings with the Rent to Own model. The benefit of this is obvious; you pay fewer taxes upfront! Never come out of pocket again to pay Uncle Sam for the income you haven’t even earned yet.

7. Tax Advantages - Claim Depreciation on the Leased Vehicles

As you are always the owner of your vehicle, you can claim depreciation on your tax returns just like any other car owner. This means that the Government is helping to shoulder some of the depreciation costs for your business!

Joshua Aaron
By Joshua Aaron - October 28th, 2022