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

Photo (cc) by Steve Snodgrass

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.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
The 3 Worst Money Mistakes You Are Making at the Gas Station
The 3 Worst Money Mistakes You Are Making at the Gas Station

Beware these cash-guzzling missteps when you stop at any gas station.

7 Reasons Not to Move When You Retire
7 Reasons Not to Move When You Retire

Sunny skies and warm breezes sound great. But in reality, you might be better off retiring closer to home.

If My Spouse Dies, Can I Get Her Social Security?
If My Spouse Dies, Can I Get Her Social Security?

If a spouse dies, will the survivor collect the other’s share in addition to his or her own?

6 Investing Tools That Help You Diversify
6 Investing Tools That Help You Diversify

Here’s how you can lend to startup businesses, fund social causes or get in on investments once available only to the very rich.

Can My Wife Use My Social Security Benefits While Letting Hers Grow?
Can My Wife Use My Social Security Benefits While Letting Hers Grow?

Your self-discipline in not uttering three little words helps determine whether you can use a key claiming strategy.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

The 16 Cars Most Likely to Last 200,000 Miles
The 16 Cars Most Likely to Last 200,000 Miles

One automaker takes half the spots on a list of the longest-lasting vehicles.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Homeowners Say These 2 Kitchen Appliance Brands Are Best
Homeowners Say These 2 Kitchen Appliance Brands Are Best

One brand takes five of the top honors, while another ranks highest in three categories.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.