Avoid The Rent-To-Own Scam
Clark wants to know how a rent-to-own store works and if it's okay to use. Dave explains and warns Clark off of it.
QUESTION: Clark on Twitter wants to know how a rent-to-own store works and if it’s okay to use. Dave explains and warns Clark off of it.
ANSWER: No, it’s not okay to use. It’s a huge rip-off. You never do rent-to-own. How does it work? You pay a monthly rental fee. If you were to add up all the monthly rental fees that you paid before you owned it, you could’ve bought six of them, and you sure could’ve bought one used on eBay or on Craigslist for two months’ or two weeks’ worth of rentals. So no, we don’t do rent-to-own.
Let me tell you where rent-to-own is. It’s always in the poor end of town. You know why? Rich people would never fall for that crap. It’s how they got to be rich. If you can figure out the businesses that are in the poor end of town and not do business with them, that’s the first step right there. Title pawning, payday lenders, rent-to-own … those are all in the same list, right? Tote-the-note car lots. None of this is good for you. It’s all good for them. The effective interest rate on this stuff is anywhere from 500–800%. No, you would never do that.
I will go into a pawn shop and buy stuff. It’s a great place to buy things. I would go into a rent-to-own place and buy their used stuff that somebody brought back at a deal that they can’t put back out in service again. You get a steal on it, though. You get a bargain. I’ve done that in both cases—some slightly used items at garage-sale prices, right?
Go to a garage sale if you need a washer and dryer. Get on Craigslist, and go to the rich end of town where they’re having a garage sale. Buy a $3,000 leather couch for $200. Argue about the color later, please. We’re trying to furnish a first-time, newly married couple’s living room. Really. The same thing with your washer and dryer. It’s crazy to pay full price for stuff, and rent-to-own is full price times three. So no, you would never do rent-to-own. Basically, they take a $300 washer and dryer set or $500 washer and dryer set, and by the time you add up all the payments, you paid $1,500 for the stupid thing. Don’t do that stuff. Bad deal. Stay away.