Is Rent to Own Ever a Good Idea?
The only time I can remember ever using a rent-to-own store was as a young kid and VHS had just come out. My dad wanted to try out a player to see if they were worth all the “hype”. So we tested it for one out for a week and got to watch movies at home – which at the time – was quite a novelty.
We returned the VHS player to the Rent-A-Center (though I recall my dad was kinda perturbed at the rate they charged him) and a year or two later soon bought our first scratch-n-dent VHS player (my dad was big on scratch-n-dent anything). We were finally living the dream.
Just recently, I saw a TV commercial for Rent-A-Center and thought, “this place is still in business?” People are actually using this service?
This got me to wondering: Is there ever a reason to go the rent-to-own route? Here’s the only reasons I could think of:
- You want to try out a product you’ve been thinking of purchasing (kinda like my dad did)
- You don’t have the cash upfront to purchase
- You aren’t credit-worthy (or don’t have credit)
- You’ve just been displaced from your home and need certain appliances to get by for a period of time
- You enjoy paying more for things
Why the rent-to-own option is rarely (if ever) a good idea
While that last point for renting-to-own is a bit tongue-and-cheek, it’s not at all far from the truth. According to a 2011 Consumer Reports article, you can expect to pay considerably more – oftentimes 3x the price of an item if you finish out a rental agreement.
As an example, the article describes a $612 Toshiba laptop found at one rent-to-own store:
It was being offered for $38.99 a week for 48 weeks, for a total of $1,872, excluding sales tax and other charges. That’s the same as buying the laptop at the manufacturer’s suggested retail price and financing it at an interest rate of 311 percent. You could buy three of the laptops outright for that $1,872.
“I think that the rent-to-own model generally is a remarkably expensive way to obtain what you need,” said Jim Sugarman, a Washington State assistant attorney general in the consumer-protection division. “There is usually a better way to obtain what you want if you do a little planning and have a little patience.”
Consumer Reports also warned readers the purchase price on items at rent-to-own stores are often higher than other stores.
Have you ever gone the rent-to-own route?
I sometimes think that getting a mortgage on a home is a rent-to-own racket. I mean, if you consider all the interest you pay on the house before paying er off – it’s often twice the purchase price (yowser!).
We do this with other stuff too – though to lesser and varying degrees. Car loans, not paying off balances on our credit-cards, etc. I think we’ve all been guilty of unknowingly participating in the rent-to-own scheme.
I’m interested to know if you’ve ever had any experience with renting-to-own. Was it a positive experience? Negative? Lessons learned?