The True Cost of Renting to Own
You have probably seen commercials or received mailers from rent-to-own furniture and appliance stores promising to rent you the latest and greatest models of popular electronics, furniture and appliances for a low weekly fee. Then at the end of the lease term, you own the item outright. Renting-to-own might appear to be a great way to get the things you’ve been wanting, without having to come up with the cash or pay for the purchase with a credit card. But there are several things you need to know before making the decision to rent-to-own:
You Will Always Pay More — The single most important thing to understand about rent-to-own items is that you will always end up paying more when all is said and done. While the ‘low’ weekly fee may make it seem otherwise, you are not getting a deal, or even a fair price. In fact, you will be paying what is the equivalent of a 60% or more interest rate, far higher than even the most unreasonable credit card interest. Rent-to-own stores are also notorious for quoting the high end of suggested retail values, when other outlets are selling the same item for much less.
Additional Fees Are Added — Many rent-to-own dealers require an additional, mandatory fee for insurance, on top of the weekly rental rate, not to mention you will ultimately be paying more tax because of the higher retail price. Some states are even pursuing eliminating rent-to-own stores because they consider it a form of predatory lending.
The Items You’re Renting Depreciate — By the time you own your item at the end of the rental term, it will have already gone down in value. If you’re dealing with electronics such as a computer or gaming system, the technology may already be obsolete and the item may be close to the end of its usefulness.
The Contract is Binding — Once you sign a rent-to-own contract, there’s no getting out of it. You are locked into paying that weekly rent, even if you change your mind or the item isn’t performing the way you want it to. If your income or employment status changes, would you be able to keep paying?
There’s a Better Way — The alternative to renting-to-own is to determine what it is you want or need and save up the money to purchase it outright. It will take a bit longer and you’ll have to make do in the meantime, but it will be worth it when you can purchase your item, enjoy it, and move on with your life without being locked into high prices, fees, and contracts.