Lending Club Blog

Rent to Own

A related topic to my post on Rental Center Pricing is the rent to own services offered by rental centers. While you may feel better renting to own compared to just renting, the price you pay will still be extremely high.

Rent to own is a service that allows you to purchase an item by making a series of regular monthly payments. Until you’ve paid the full amount, the item can be returned. So you are basically renting the item until you’ve made a certain number of payments, at which time you finally own it.

Rent to own services let people buy things without needing the full amount, or even a down payment in some cases, up front. For that convenience, the costs can be quite high. The State of Wisconsin Department of Financial Institutions reports that using rent to own commonly costs twice as much and sometimes even four times as much as purchasing the product outright. They give an example of a $200 television that costs $700 through rent to own.

The best alternative to rent to own is simply not making a purchase you cannot cover with your existing savings. Next would be to save up the money first before making the purchase. In the television example from above, saving the proposed rental rate for 24 weeks would enable you to buy the television you would be renting at that rate for 78 weeks.

For purchases that must be made and can’t wait for the money to be saved ahead of time, getting a loan from a social lending site is a great option. A peer-to-peer loan can get you the money you need at a much lower cost than using rent to own or a high-interest credit card.

Thursday, May 29th, 2008 at 9:46 am

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