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Making Successful Rent-to-Own Decisions

Many people ask if rent-to-own furniture is a good way to purchase items. While we understand that this may seem like an easy way to purchase items you may not be able to because of credit issues, doing so can stretch your finances beyond anything reasonable. Let’s look at a real example.

  • The television below is being sold and marketed by a national rent-to-own furniture store. Buy it now using their store financing and you will pay over $3,600. That is more than double what it is selling for at other electronic and department stores. It will also take you twice as long to own the item!
  • LG 55” Smart 4K TV (model OLED55B8PUA) – average retail price $1,499.

Rent-to-own compared to saving for a purchase

 Amount per WEEKTime to ownAmount Paid
Pay via rent-to-own$39.9991 weeks$3,639
Save and buy in cash$39.9940 weeks$1,634 (includes sales tax at 9%)

What should I think about before using a rent-to-own service?

  • How long will it take to own the item if you save versus if you rent-to-own?
  • How much money do you lose by renting the item versus saving to buy it?
  • Read the agreement. Are there any other fees to rent the item: delivery, account set-up, late fees, etc.
  • What happens if you do not make a payment? How long before they come to remove the item? No one wants this to happen, but it is important to know.
  • Are you buying a new item versus a used item? You could spend $3,639 on a previously rented (USED) television.

What options do I have besides rent-to-own?

The first answer is to wait. Is this something you can live without for a while? Is there a less expensive alternative that you can use or obtain right now while you save for the item? If there is no alternative and waiting to buy the item is not realistic, here are some ideas to help avoid taking a rent-to-own offer.

  • Borrow from someone else. Ask friends and family if they have the item you need.
  • Consider buying used. Check out secondhand stores, garage sales or use apps like OfferUp, LetGo, or Facebook Market place to buy used items locally. On these sites, local people buy and sell many different things. You may be able to negotiate a price that fits into your budget.
  • Buy reconditioned or refurbished items. This is especially popular with computers, cell phones, lawn equipment and other electronics. These items have typically been used and returned to the manufacturer or store. The item is then cleaned up and repaired if necessary. There is a higher risk that something may go wrong with the item, but many come with a warranty.
  • Look for sales. This may require waiting, but you could score a great deal that saves you hundreds of dollars.
  • Credit. Good credit can help you purchase things that you need, at a better price than you’d get via rent-to-own. If you qualify for a zero percent interest rate (usually introductory) and pay the debt off in the required time, it may not cost any extra money. If interest is applied or you do not qualify for a low interest rate, you may end up paying too much for an item.

People generally consider using rent-to-own services when credit is an issue. That is why it is important to work on adding positive information to a credit report. If you do not have credit or if you need to build or rebuild credit, the credit counselors at American Financial Solutions may be able to help. Call today to learn about credit and about ways to get out of debt.

Published Jun 5, 2019.