When considering whether to rent-to-own a consumer product, think about the costs of making what appears initially to be small weekly payments. Read the rental agreement carefully, and you will see that a TV with a retail price of between $250 and $300 has payments of under $20 per week with no credit check, but that over the year and a half you make those payments, the total sales price can amount to four or five times the retail price of he same TV you could buy, simply be saving the same money for 4 months or less! Some interest rates on these rent-to-own agreements are over 200 percent!
And according to the rental agreements, a missed payment results in the store being able to repossess the goods, leaving you with no TV, and no credit toward the payments you’ve already made, even if you were close to paying it off before the missed payment.
Last week, I heard from a consumer who had bought a used washer and dryer on a rent to own contract where the total payments were $2,932. The same used washer and dryer could have been bought at Goodwill or the Habitat Store for about $200 without high interest rates for weekly payments.
The NC Attorney General’s Office suggests that before you decide to rent-to-own, ask yourself the following questions:
Is being able to return the item after using it worth paying more than double in rent what it would cost to purchase the item?
How does the cost and terms of renting-to-own compare to other payment options, like layaway or installment payments?
How does the amount you’ll pay weekly compare to the total cost of the item?
How long must you make payments before you own the item?
How much would you pay for the same item if you bought it someplace else?
Is the item new or used?
If you have a complaint about a rent-to-own contract, contact us for help or call toll free within North Carolina at 1-877-5-NO-SCAM.