Financial scam - Rent to own ripoff

Rent to own can be a financial scam

The establishment of good credit takes time, and young adults starting out on their own often find it difficult to obtain basic household items with no established credit. It's costly to buy a television or an apartment full of furniture, and saving money to do so could take quite a while, possibly years. Instead of putting away cash to buy products, many young people decide instead to take what seems to be the quick way out - getting their furniture or TV from a retailer that offers a "rent to own" option. But that rent to own television can turn out to be very expensive, indeed, as such business ventures are often little more than a financial scam with interest rates that rival those of payday loans.

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With rent to own, the shopper pays weekly for a fixed length of time - usually eighteen months to two years. The renter can choose the stereo or appliances that he wants, sign the rental agreement and soon have that room full of furniture. At the end of the rental term, the renter gets to keep the item purchased. The average store will have a selection of home furnishings and appliances, such as refrigerators or washers and dryers.

The idea of renting may seem appealing to a lot of consumers. Is renting to own actually any different from making credit card payments over time?

The lengthy time period needed to "own" the furnishings means that the rental company will receive far more money over the duration of the contract than the purchase is worth. The cost of renting to own can be deceiving; by the time you have finished the rental agreement, some eighteen months later, you will discover that you have in fact paid $750 for a $250 television. The rental price may sound fair, when only looking at the weekly price. If you have rented $1000 worth of furnishings, you may realize that you have forked out three thousand dollars for it by the time you actually own it.

It's easy to see that renting to own is no deal when you contemplate all of the financial aspects of the rental agreement. If you fail to make a payment, the merchandise may be taken back by the rental company, leaving you with nothing to show for your cash. You may learn that the store has reported your lack of payment to the three credit bureaus, which could lower your credit score and make it even harder to buy furniture or appliances in the future.

Before signing up, make sure that you read it carefully and appreciate all of the terms. Be sure that the rent to own company agrees to report your timely payment to the credit bureaus. There are times when it may make sense to make use of a rental company. You want to make sure that your rental helps you establish a credit record so that you will have a simpler time buying down the road. You should do some comparison shopping so that you understand exactly how much you are paying in comparison to how much you would pay if you bought the merchandise outright.

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