These days, it seems like you can rent-to-own practically anything, from fitness equipment and furniture to electronics and major appliances. The deals can seem really good, especially if you think you are making small payment instalments. But before you sign on the dotted line, take a moment to crunch the numbers (the original price, interest and any additional fees) – the true cost of rent-to-own just might surprise you.
To make an informed decision, it’s important for consumers to know the total cost of the product. For example, a 60” Samsung LED TV & Dongle may cost a consumer about $2,750 (before tax) if they made an outright purchase. If this same consumer chose to go for the rent-to-own option, the total costs might come to more than $7,500 (not including other charges, such as processing or delivery charges) – that’s a lot of extra cash! Here are some tips for consumers considering a rent-to-own type purchase:
Understand what you will ultimately be paying.
Add up all of the payments to find out the ultimate cost to you. Often, you will end up paying much more if you choose to rent-to-own. Are the payments monthly or weekly? How long will you be making payments for? This makes a big difference in the total cost of the item.
Be clear about extra and hidden fees.
You may find that there are hidden fees either included in the price or beyond the price being advertised. Ask about the costs of processing fees and delivery charges. Find out if plans like protection coverage or insurance are optional and what they actually cover so you can make an informed decision.
Read the fine print of your contract.
Does it include your cancellation rights? Does the contract have all the required elements? Reading all the fine print helps you to understand your rights and obligations.
Know the details of your obligations are at the end of the rental period.
Is there a penalty if you terminate your agreement early? Find out if (and how much) you will owe at the end of the rent-to-own period.
There are many purchase and renting options for consumers. Please remember: ask questions and get all the necessary information before you make a decision.