The 411 on Rent-to-Own

7 04 2011

Educated consumers are sure to learn about alternative lenders because money is an object to them.  Educated consumers seek fair prices for the goods and services they seek.  Prior to shopping, they research a store’s policy regarding returns, exchanges and warranties.

The rent-to-own industry is an example of an alternative lender.  What happens here is consumers sign a contract to rent a specific item until it is owned, paying rental fees and finance charges.  If a payment is missed, the rent-to-own company can seize the goods with no allowance being made for your prior payments.  Costs under these contracts are extremely high.  

For example, it might cost $20 per week (for one year) to rent a couch that is worth $400.  The finance charge would be $640.

52 weeks TIMES $20 rental payment MINUS $400 couch value = $640 finance charge

Prior to entering into such an agreement with a rent-to-own company know the rules.  Understand that if one payment is missed, you lose out on all prior payments and the item will be seized.  If your financial situation does not afford you to purchase certain things, seek out garage sales, floor models, store layaway, etc.  In the long-run, saving up for an item makes economic sense rather than renting it.




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