A newspaper article told the story of a homeowner who answered his door one Halloween night to find three masked men standing on the doorstep. When the men got their foot in the door, they confiscated a home entertainment center.
Now you're probably imagining a burglary; however, these three intruders worked for a rent-to-own company and were at the man's home to repossess an item because payments were three months past due. When questioned about this unethical procedure, the store manager replied, "It was the only way we could think of to get inside the house."
Although this example is extreme, it's just one of the many horror stories being written about consumers who failed to understand what might happen if they neglected to meet the requirements of a rent-to-own contract.
The rent-to-own industry is rapidly growing and it's easy to see why consumers are attracted to these establishments. Advertisements such as...
- No Down Payment;
- No Credit Check;
- Low Monthly Payments; and
- Free and Quick Delivery;
...make renting-to-own sound too good to be true.
But how would you feel if the ads read:
- Pay $1,600 for a $700 TV.
-Miss one payment and we'll repossess the merchandise and keep all the money you've already paid.
- Rent previously owned merchandise at new merchandise prices.
Which set of ads should you believe? The answer is - BOTH!
While it is true that rent-to-own contracts require no credit check and no down payment, they're also one of the most expensive ways to own merchandise. What's more, if you miss a payment, you risk losing the item along with all the money you've already spent.
Let's take a closer look at rent-to-own agreements and talk about questions you should ask before deciding that renting to own is for you.
When you sign a rent-to-own contract, you are agreeing to make weekly or monthly payments for a specific period of time in hopes of finally owning the item. Although the weekly payments may be low, the number of weeks you pay are typically high. Here's an example.
Let's say you sign a contract for a television agreeing to pay $17.95 each week for 78 weeks. At the end of 78 weeks you own the TV. Although $17.95 sounds reasonable at first - multiply that amount by 78 and consider the results. The total cost of the TV is $1400.10.
Now, suppose the TV is only worth $500. You've paid $900.10
