Why Rent-To-Own is a Bad Idea

: Chris Lee Law Firm

  Filed under: Money Management

Rent-to-Own businesses have been around for some time and we are often consulted on if these types of installment plan purchases of household appliances and furnishings is a good idea. The answer is most often: rent-to-own is a very expensive way to do either. In fact, renting-to-own is often a costly financial mistake.

What is Rent-To-Own?

Rent-to-Own companies offer electronics, appliances, computers, and furniture to consumers who suffer from a lack of cash and, often times, poor credit scores. The companies offer the ability to buy these items, many times with little to no money down, in exchange for a weekly or monthly payment. The major pitfall of these transactions is that purchasers look at the lower payment amount and fail to grasp the total cost. In the majority of cases, you could be paying as much as twice the retail value of the item.

Alternatives to Rent-To-Own

While the saying patience is a virtue may be overused, it applies best to rent-to-own situations and that patience can save you an enormous amount of money. Come recent cases of Rent-to-Own stories equated the APR rate to be well over 120%. Instead of forking over this much in fees, shop second hand stores, estate sales, and even yard sales. It may take more effort and time to find lightly used furniture or appliances that are still in good condition but you are letting the previous owner take the brunt of the loss in value. While you are eliminating the immediate gratification of obtaining new stuff, you will be literally saving yourself thousands of dollars.

Not only are Rent-to-Own programs expensive, they are also unregulated by federal law, which means you are taking on all the risks. If you miss a payment, the rental center may even repossess the item with the missed payment and all your money that you invested towards the purchase is lost.


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