Rent-to-Own: The Most Expensive Way to Buy?

What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Think paying 30 percent interest on a credit card is hard to swallow? It's chickenfeed compared to buying the rent-to-own way.

Need a laptop? You can get one for $40 a week with the option of keeping it after you’ve made the required number of payments.

It’s called rent-to-own, and you can do it with everything from computers to furniture to appliances. But this method of get-now-pay-later is nearly universally detested by consumer advocates for a simple reason: Rent-to-own boils down to extremely high costs that are often marketed to those least able to afford them.

In the video below, Money Talks News founder Stacy Johnson discusses the pitfalls of rent-to-own, and explains the true cost of that $40/week laptop. Check it out, then read on for better alternatives.

As Stacy explained, buying that rent-to-own laptop Consumer Reports checked out is equivalent to paying 311-percent interest – which is far worse than the 30-percent interest rate you see on crummy credit cards.

But it’s people with poor or no credit who are most often on the receiving end of these deals. As Rent-A-Center spokesman Xavier Dominicis points out in the video above, “There’s no credit check, no security deposit, no long-term obligation. Delivery is free, and you can return the goods at any time.” The only real roadblock to would-be renters is that companies typically verify employment.

A 2000 Federal Trade Commission survey backs up the allure to the working class: 59 percent of rent-to-own customers had household incomes under $25,000 and 73 percent had no more than a high school education.

If you’re stuck in a situation where you’re thinking about rent-to-own, or know someone who is, think about these things first:

  1. Consider the alternatives. Consider buying used from a yard sale or thrift store, and check sites like Craigslist and Freecycle for cheap or free furniture. If you can wait a few months, do what Stacy suggested in the video: Setting aside what you would pay to rent an item may be enough to buy it outright at a fair price. In-store financing may be a relative bargain, and even getting a credit card with a terrible interest rate is cheaper than most rent-to-own deals.
  2. Know the law. Some states have laws capping prices, prohibiting unreasonable fees, enforcing price disclosures and requiring property damage or loss insurance. You can look up your state’s rules at the Association of Progressive Rental Organizations website and make sure the company isn’t charging more than the law allows.
  3. Read the fine print. Know if your payments are weekly, twice a month, or monthly. Check out the fees and taxes, and find out who’s responsible and what happens if stuff breaks or gets stolen.
  4. Fight for your rights. Consumer Reports says Rent-A-Center, a large Texas-based rent-to-own company, settled a complaint by the state of Washington over aggressive collection tactics and other alleged violations. (The company denied wrongdoing.) Our story “Abused by a debt collector? Get a free lawyer” discusses what’s legal and what’s not, along with what steps you can take.
  5. Remember need vs. want. Keep the item only as long as you really can’t do without it to minimize the damage. The longer you keep most rent-to-own items, the more money you lose.

If you’ve ever considered renting-to-own, or struggle with affording the things you want, check out our story The 10 Golden Rules of Saving on Everything.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: Ask Stacy: What’s the Best Way to Borrow?

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,063 more deals!