There is no doubt that lease-purchase programs can help you acquire essentials, whether these programs are used for HVAC financing, water heater financing, furniture financing, or appliance financing. However, the benefits of lease-purchase programs go beyond making your purchases more affordable. Here are five ways lease-purchase programs can be used to improve your finances:
Stick to a Budget
When using a lease-purchase program, you select what you need and a leasing company purchases it on your behalf. The leasing company then leases it to you for a flat recurring fee. At the end of the lease contract, you own it.
Most financial advisers agree that the best way to get your financial house in order is to spend less than you earn. For most people, this means setting a budget that lists all your sources of income and all your expenditures.
The benefits of a lease-purchase agreement are that the purchase price is spread out over time and the lease fee is a fixed amount. This means that your budget will not be destroyed when you need to buy a new furnace or make some other large purchase. Moreover, since the lease fee is a known, unvarying quantity, you will be able to include it in your monthly budget.
Pay Things Off
Many loans, such as mortgages, purchase loans, and personal loans, have prepayment penalties. This means that even when you have the money to pay off a loan, you can be penalized for doing so. Unlike loans, lease-purchase agreements include early payment options.
The early payment options available in a lease-purchase transaction will be spelled out in the lease agreement that you sign when you receive your purchase. If you get a bonus at work or have some extra birthday money left over, you can exercise your early payment options, pay off the lease, and terminate the lease agreement. This frees up the lease fee from your budget and puts more money in your pocket for savings, investing, or spending on other necessities.
Invest in Yourself
Most people only look at the expense side of the budget, as if the income side is outside of their control. However, the income side can change your finances enormously with a little bit of investment.
The average worker can expect wage growth of somewhere around 2% to 4% per year. However, earnings for those with a college degree are almost double the pay for those without a college degree on average. For certain degrees, the pay disparity is even greater.
Lease-purchase programs can help with this investment in yourself. Lease-purchase programs can be used for laptop financing to acquire the computer that is so essential to higher education. Moreover, lease-purchase programs can be used to finance other necessities, such as furniture, HVAC, and appliances, while in school. This will free up money that can be used to pay for tuition and books.
Invest in Your Home
According to surveys, an up-to-date kitchen is the most commonly requested feature among millennial home buyers. In fact, investing in new kitchen appliances can increase the resale value of your home by more than the cost of the appliances, increasing your profit from the sale. Thus, new appliances can make you money when it comes time to sell your home.
Lease-purchase programs can be used to update old appliances or replace broken appliances, such as refrigerators, dishwashers, and stoves. This not only allows you to live more comfortably but can provide a positive return on investment.
Improve Your Credit Score
Nearly 45 million Americans have bad credit, which is defined as a FICO credit score of 599 or less. Rehabilitating bad credit can be a long process. Worse yet, many people do not know where to start.
One way to repair bad credit is through lease-purchase programs. Your credit history will reflect on-time lease fee payments. This goes a long way to building up your credit history so that you can qualify for mortgages, get approved for credit cards, and even avoid utility deposits.
Lease-purchase programs can help you with controlling debt, investing in your home, and investing in yourself. Moreover, paying on time and exercising early payment options can help with rebuilding credit.