Why Rent-To-Own Will Own You
from daveramsey.com on 12 Apr 2013
Would you pay $1,900 for a $600 computer? Of course not, right? What about $2,700 for a $1,000 washer and dryer? Terrible move, right?
These are no-brainer questions. No one would go to a store and say, “Hey, I’ll give you three times what that television is worth! Where do I pay?” But, sadly, that’s what a lot of people do when they choose to purchase from rent-to-own stores—which is seriously one of the worst moves you can make with your money.
After interest and rental fees, consumers can spend as much as three times on an item as it is worth. So you want to pay $2,000 on a $700 computer? You now know where to go!
According to Consumer Reports, there are more than 8,600 rent-to-own stores in the United States and Canada. These stores generate around $7 billion in annual sales.
They’ve figured out how to make money off the “got to have it right now” generation, and they’re making a ton of it. They know we’re willing to pay insane interest rates because we just have to have that new television or computer or fancy couch.
When you rent to own, you end up getting owned. It’s that simple.
Want a Laptop Now? Pay $1,272 More!
Let’s look more in-depth at the numbers, using a $612 Toshiba laptop that Consumer Reports found at a rent-to-own store.
The store was offering the $600 laptop for the price of $38.99 a week for 48 weeks—meaning you would pay $1,872 (not including tax or rental fees) for that one computer. You could buy three of the exact same computer for that amount of money!
Think about this: If you simply put that $38.99 into the bank every week, instead of paying it to the rent-to-own store, you would only have to wait four months to buy the laptop outright. Four months! That’s nothing compared to paying three times what the computer is worth.
Hassles Beyond the Store
One caller named Kerr told Dave on The Dave Ramsey Show that he did a rent-to-own deal for a musical instrument. That $250 “purchase” ended up leading to $1,800 in debt and constant harassment from a debt collection company. There are thousands of the same types of stories from people who have made the mistake of going to a rent-to-own store. Share yours in the comments below.
So if you want a new couch, a television, a dining room table, or whatever it might be, save your money and buy those things. You can find ridiculously good deals on Craigslist, at garage sales, at consignment shops, and even by walking into a store waving all the cash you have to spend!
There isn’t one good reason to ever buy anything from a rent-to-own place. If you do, you’ll get owned in the end.