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Rent-To-Own can cost
five times more than retail

A credit card, a loan or old-fashioned
savings account will save you $$$.

Thinking about making a rent-to-own purchase? You may want to reconsider. Despite invitingly low weekly or monthly payments, rent-to-own customers can end up spending two to five times more than retail. Additional fees built into the transaction could result in consumers financing their purchases at triple-digit rates (Bankrate.com June 11).

Although renting to own costs more, buyers with uncertain financial futures find that rental contracts allow them to keep their options open. According to a recent Federal Trade Commission survey, 59% of such customers have an annual income of less than $25,000.

Read the contract carefully
When considering a rent-to-own agreement, read the contract carefully and check the fine print. Understand exactly how much the payments will be and whether or not the figure includes tax. Ask if there are add-on fees and if so, what are they and how much? Find out when payments are due and what late fees will be incurred.

The contract also should determine who is responsible if the merchandise is broken, lost, or stolen. One of the advantages of renting to own is that if the merchandise turns out to be faulty, the store is obligated to provide a loaner while fixing the original. In general, get all promises or guarantees in writing, since the written word is binding.

Consider other options
Instead of going the rent-to-own route, other options for consumers on a budget include charging the merchandise, (even a 26% annual percentage rate--APR--is cheaper than renting to own), investigating a credit union loan, or using the old standby: saving for a desired item.

(Source: Credit Union National Association)

Related Links:
Consumer Federation of America

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