As we were filling out umpteenth loan application form one night a commercial for a popular insurance company came on. It offered to give us a free quote from them and from some of their competitors. I have no problem with idea but I have always wondered how much effort they really put into finding lowest rate available for coverage needed. After all they too were trying to get our business. But then I had an idea!

What is Lease Purchasing?

A Lease Purchase is a process that combines a basic rental lease with an agreement to purchase, or with an option to purchase property. The Buyer (or Lease-Purchaser) pays to seller a monthly payment that usually approximates a rental amount or a typical mortgage payment on home. A percentage of that payment is typically applied towards purchase price. At end of term, buyer has right to purchase property for price and terms to which both parties have previously agreed.

Put another way, a lease purchase is essentially a rental agreement combined with a purchase contract with pre-negotiated terms. The buyer leases property for a specific period of time and then purchases property before end of lease agreement. Sales price, length of rental, rent credits, escrow instructions, etc., are all contained in agreement.