Rent to Own

If you’ve thought about taking advantage of a “Rent to Own” offer, think twice. Renting to own can be both expensive and risky.

Rent-to-Own offers have been around a long, long time. You’ve probably seen ads on TV and newspapers or heard about such offers on the radio. They sound appealing enough, especially to people with low or fixed incomes and bad credit because of the way they’re presented — as an easy way to take home and begin using expensive electronics, furniture or appliances immediately. What could be wrong with this picture?

Rent-to-Own ads are misleading

You may be wondering why we’ve included renting to own on a website about scams. Is renting to own a scam? Yes and no. It depends on how you look at it. The ads themselves are a great place to start. For example, one ad might state that you can rent to own a new television for as low as $15 a week. No credit, no hassles! That’s a very appealing sales pitch if you want a new TV but are low on funds and can’t get credit. What if we worded the offer to reflect what you’ll really pay?

What if the ad offered you a $400 TV for $1200? Would you still be interested? Many people take advantage of deals like this all the time without realizing they’re the ones being taken advantage of. How so you ask? Well, first of all the sticker prices at rent to own shops are significantly higher than they are at regular retailers. The second way they get you is the payment terms. Did you notice that I said the television was going to cost $15 a week rather than a month? That’s $56 a month. So the TV should be paid off within about six months, right? I’m afraid that isn’t how it works.

The real costs of renting to own

If you agree to their terms, renting to own will cost you several times the cost of the product at regular, uninflated prices. Here’s how — the agreements often say that you pay a certain amount per week for a certain number of weeks. Somewhere, buried in the fine print, there will be an indication of the actual cost you’ll pay. It will have little to do with the cost of the item and a lot to do with how much they can get you agree to pay for it. The number of payments will determine the final cost of the item you are renting to own. If you agree to pay $15 a week for 18 months that $400 television is going to end up costing you $1,170! (78 weeks * $15)

Miss a payment, lose everything!

There’s one more thing built into these rent-to-own programs that make them a poor choice. If you miss a single payment, the item could be repossessed. And the money you’d already paid up to that point — lost forever. No credit, no soup for you.

Rent-to-Own Tips:

  • Evaluate both advertised and actual prices on items in the rent-to-own store and other shops. (Rent-to-own prices are often twice as much)
  • Verify the complete cost to you for rent-to-own (the weekly or monthly amount multiplied by the number of payments)
  • Instead of sending off money to the rent-to-own store, pay yourself the same amount each week or month and put it into savings. Faster than you think, your savings account will hold enough money for you to go out and purchase the item you want. It will be yours with no fear of repossession in case of a missed payment.
  • Take a calculator with you, do the math and save a bundle.
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