Lease-to-own financing is a type of non-prime financing for customers with no credit history, or are building credit.

The financing company purchases the item from the merchant, pays the merchant upfront, and leases the item to the customer over a fixed period. The customer still gets to use the item but doesn’t technically own it until they have made their last payment to the financing provider.

Instead of an annual percentage rate (APR), the customer agrees to a total amount they will pay the lender for the leased item, which is split into regular payments over a fixed period, such as 12 or 24 months. This means the customer always knows the maximum amount they will have to pay, which gives them peace of mind.

The customer can exercise an early purchase option to gain ownership of the leased item and save on financing costs. Customers can end their lease at any time by returning the item.