What is 'Rent to buy' and how exactly does it work?

If you do not have the financial space for a while but see a great opportunity, a 'rent to buy' property can be a solution. Rent to buy is a relatively unknown form of borrowing or lending money in Curaçao real estate, which involves repayments. Once you have paid the last installment, you become the owner of the product. In this article, you will read more information about the rent to buy concept and get answers to questions such as "What is rent to buy?", "How exactly does rent to buy work?" and "What can you finance through a rent to buy property?"

Rent to buy deed

In a rent to buy agreement, the term, interest, and repayments are determined in advance. The interest is fixed. If you opt for rent to buy, a deed will be drawn up. This deed contains the full sale price, the amortization schedule, and the retention of title. The retention of title contains requirements that you must meet to become the owner of the product, such as paying off the full loan. The deed must be signed by you and your partner, if any. For more info, see buy property in Curaçao.

Rent to buy a car on Curaçao

A product that is often bought through rent to buy is a car. Usually, there is a small down payment, and the remainder is paid in installments. The car only becomes your property once the full amount is paid. If you cannot pay the monthly installments and have not yet paid off 75% of the loan, the car can be reclaimed. If the proceeds from the car are insufficient to cover the debt, you must pay the remaining amount. This system is also referred to as leasing on Curaçao. Scooters and motorcycles can also be purchased through rent to buy. You only become the owner when all repayments are completed, similar to Curaçao real estate.

Rent to buy a house on Curaçao

Rent to buy of a home is also common. With a lease-purchase house, you pay a fixed amount of rent and repayment every month. This option is often offered if you are already living in the home. Rent to buy can also allow you to take advantage of the mortgage interest deduction scheme. The interest you pay is deductible under the home ownership scheme. However, there are drawbacks: you only become the owner when all payments are completed, the property can be reclaimed, and you are liable for any damage to the home.

The pros and cons of rent to buy

Rent to buy has advantages for both the seller and buyer. For the seller, the purchased product can serve as collateral, ensuring payment security. For the buyer, the product can be used immediately. The downside is often a higher interest rate, making rent to buy potentially more expensive than a traditional bank loan. Additionally, the seller may reclaim the product if less than 75% has been paid and the tenant cannot continue payments.

Rent to buy vs Installment Purchase

Rent to buy is a variant of an installment purchase. The key difference is ownership. When you buy on installment, you immediately become the owner. With rent to buy, you only become the owner after all repayments are made. Until then, the vendor or lender remains the rightful owner of the product.

For more information or assistance in drawing up a rent to buy agreement for your home on Curaçao, please contact me at adriaan@sunlife.realty.

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