If you're thinking of buying a TV
by using rent to own, watch out!
Rent to own claims to "rent" TVs, appliances, stereos, and furniture.
But to buy that TV, you have to keep paying for 78 or 87 weeks (1.5 years). The weekly payments add up to extremely high total cost. To own the TV, you would pay enormously high effective interest rates! If you miss a payment, the store will take the TV back, even if you already paid more than its fair market value. So rent to own is a really bad way to buy a TV.
How much do things cost at rent
* a $329 washer for $1,166 at rent to own,
* a 19" TV worth $200 sold for over $1,000.
If you think any of these prices is a good deal, we have a bridge we'd like to sell you.
What the rent to own store in the cartoon did not disclose, is that selling a $200 TV on time for $12 per week for 87 weeks amounts to an effective annual percentage rate of 310%! Yes, six percent per week! Consumers League thinks such usurious interest rates have no place in a civilized society
There are much better ways to buy
a TV. Using a credit card or department store charge would cost
about $12 per month, or $240 total, at 22%. That's a lot
better than $12 per week at rent to own.
The consumer can't win with rent to own. If you quit in the middle, you've paid $600 for a $200 TV you just gave back! If you pay to the end, that same $1,000 could have bought you five TVs! Either way, you've been had.
Rent to own exploits poor and urban consumers: RTO customers pay four times as much as the middle class.
Print out this page and pass it
Everyone can ask their state and federal representatives to pass laws protecting consumers from loanshark-type interest rates. Sad to say, some states have passed laws actually allowing rent to own to exploit consumers at interest over 100%!
Schools, social agencies, churches, government can educate consumers about the true cost of rent to own. We bet you won't find any disclosure of the annual percentage rate in a RTO contract. Consumers League has a pamphlet similar to this web page, a poster, and also the RENT TO OWN RAP.
Radio stations and television: play the RENT TO OWN RAP as a public service announcement (30 or 60 seconds).
If you have already signed a rent to own contract, you ought to see an attorney to go over what options you may have in the state/province/country where you live.
To see copies of the original Rent to Own pamphlet in Adobe Acrobat (you need version 3.0 or higher), just click below on: Adobe Acrobat version: With Rent to Own, Your Paycheck's Blown, This is a large file, and takes a while to open.
If you do NOT have Acrobat 3.0, you can download a free copy of Acrobat from Adobe Corp.
Copyright 1999 by Consumers League of New Jersey, All rights reserved.