Rent To Own

I was watching some tv with the wife tonight when a commercial came on.   This commercial was from a store that sells electronics, furniture and appliances.   Not to different from many stores in the same industry.  The biggest difference between this store and it’s competitors is that it “leases/rents” the items if you don’t have the money to pay for it outright, or if you don’t have a sufficient credit score to finance it. 

I don’t know about you, but if I’m going to buy something, I want to see the price while I’m shopping without having to ask anyone for it. This goes for anything. If I go to a car dealership and see one I like and there is no price sticker on it, I leave. They obviously don’t want to sell the vehicle to me so I’ll take my business elsewhere. 

I don’t have one of these stores locally anymore, it shut down about two years ago which I think is a good thing.   People probably saw how much of a scam renting to own is.   I visited this stores website, wanting to do some research to show how much the prices are jacked up, but for some reason, they don’t want to tell you what the price of an item is on the site until after you have filled out your contact info, email and only then the store calls you to tell you the price.  Screw that.  You can’t even find any of the terms of service for their lease program.  I looked up a comparable TV on one of their competitors websites.  The tv sells for roughly $700.  Since I can’t find exact prices and details on their lease agreements,  I averaged some prices from sites about renting to own.  When renting to own you should expect to pay at least double for the item versus if you were paying cash for it.  More likely you will be paying closer to 4-5x what it actually costs, this tv would probably run $2500-$3000 if you paid minimum payments for the whole lease term. What a rip-off.  If you bought the same tv from somewhere else it would cost you $700 + Tax.  

I can’t remember what blog I read it on, but I read an article on cash-advance companies and how much interest they charge.  This is basically the same idea.  They market renting to own appliances, furniture and electronics to lower earning consumers because they know they can’t finance or because they can’t pay outright cash for it.  Brilliant marketing strategy, but is ethical?  Hell no.  Making someone pay $4k for something that costs $1k is unethical.  They are in the business to make money though, which is the point of owning a business.  This won’t go away though, they will continue to market towards low wage earners until it stops working.  People have to wise up to how much money it really costs them by renting versus saving for it and buying with cash. 

This is one of the reasons why I stress research.  It doesn’t matter what you are buying, a home, tv, freezer, vehicle or anything else you can think of.  Always research it.  Look at everything in your contract, read the small print.  Is there an early payoff penalty?  What is your interest rate?  What is your total payment going to be?  Could you finance this through your local bank cheaper instead of choosing the company’s financing?  My best advice is never rent to own.  Instead of renting, save cash by cutting something in your budget.  Anything but renting to own.   Luckily I have never done this, although you could probably classify a car loan as basically the same thing if the interest rates are high enough. 

Have you ever participated in renting to own?   How was your experience and would you ever do it again?

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5 responses to “Rent To Own

  • Alice @ Dont Debt

    I haven’t ever done rent-to-own and never would. They prey on folks who are in debt and can’t get financing any other way, or who can’t imagine having enough left over each week or month to actually save up the money to purchase outright.

    They’ll stay in business as long as people handle money poorly. Which will likely be forever.

  • addvodka

    I would never do anything like this; it comes out as way more expensive than just buying the thing, and I liken it to payday loans.

  • Saving from Scratch (@SavefromScratch)

    I had a conversation with a friend about those cash advance places over the weekend. I just can’t believe how desperate people must be for cash. Those stores seem to be on every corner! It makes me feel very fortunate.

    A recent poll here in Canada found that 57% of Canadians are living paycheque-to-paycheque. That’s alarming… http://ow.ly/9T9Wt

    • debtntaxes

      I’m sure its about the same if not higher here in the states. I’ve lived paycheck to paycheck in the past during college and wasn’t a huge fan of it. Although I don’t think anybody is lol. One of our goals is to be able to live off of one paycheck if we had to. I know for sure that I would cut a ton out of our budget if one of us lost our jobs. Probably sell a bunch of stuff also before I would ever think about using a cash advance place.

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