Rent to own appliances hidden costs and benefits

Many rent-to-own companies impose hidden costs and fees in their prices. Here are some pros and cons of the industry.

Photo Credit: Scott Fichter
By Bonnie White

Although today’s world would not be complete without the existence of rent-to-own companies there was a time in the not-so-distant past where rent-to-own only meant “lease with the option to buy” in the realty world. Before 1980 there may have been something similar but the rent-to-own industry truly began to blossom, and flourish, in the mid-1980s.

The rent-to-own industry is a dream comes true for the owners of the companies. On the other hand it is simply a candle in the dark for many people in a world of credit scores, credit cards and living beyond one’s means. Not to say that rent-to-own companies are the devil in sheep’s clothing but, for someone who does not have the money to outright purchase items, it is about the only solution for new appliances, furniture, electronics and jewelry.

There are a couple of benefits in purchasing merchandise through a rent-to-own company. The payments for items are spread over a weekly, bi-weekly or monthly basis while you can take the item home and have immediate use of it. Many places will also work with consumers who may be having difficulty if they have been an upstanding customer and make their payments on time and communicate openly with the company. Also if something happens where the item is either not needed or there is a defect the company will reclaim it.

Another benefit of renting to own is that there is usually no credit check prior to purchase. If there is a credit check it is usually a basic check and many poor credit owners will still be able to rent to own. Many times the main requirement is to have a full-time job, possibly steady work history for six months. Most people do qualify for large rent to own companies.

Unfortunately there are some hidden costs as well as some poor aspects to the rent-to-own industry. Almost every company imposes higher prices on the rented merchandise. This is caused partially by the local state taxes but is also simply part of the price. Most items cost two, if not three, times as much as the outright purchase price. In other words, by the time the renter has paid the merchandise off (purchased it) they will have paid enough to buy two, if not three, of the same item at regular prices.

Some other fees may be included with the contract such as repossession fees, late payment fees and fees for damage done to the merchandise. To find out if your contract includes any or all of these fees you will have to thoroughly read your contract and ask questions. You can also ask the sales person directly about these fees and compare their answers to the terms in the contract.

If you choose to work with a rent-to-own company you may be able to find a small, family owned company to deal with. Sometimes they are better able to work with you if you have sudden problems or if you are wanting something in particular that they don’t currently carry. Always check the background of the company whether it is a national chain or a family owned business. Check with the Better Business Bureau to see if any claims have been made against the company.

With some careful research, attention to fees and details and some common sense, rent-to-own may be the way for you to go. Unless you can afford to wait until you have saved up the money for an outright purchase.