Rent To Own Insanity
By Steve GillmanI just got a sales brochure in the mail from a local rent-to-own store. It’s one of the big companies, but the name is not important since they all operate about the same way. They target the young and irresponsible and ignorant.
Let me give you a quick example. One item in the brochure is a Toshiba 26-inch LCD TV. I went online just now and found that you can buy one for $399, not to mention that you can buy cheaper brands in that size as well. So what does it cost you to own one by making payments? Just $18 per week, the advertising says. But look at the small print, which the law must require.
“Total of all payments: $1,637.08.” That’s right. You get to pay four times as much as a cash buyer. By the way, at $18 per week you could save the $399 to pay cash in about five months. You pay the extra $1,200 for having it now.
It doesn’t make sense any way you look at it. Even if you paid for the TV using a credit card that charged you 24% interest and then made payments of $18 weekly on the credit card it would be paid off in less than seven months and for a total of less than $500 - less than a third of what you pay to own it through the rent-to-own place.
Part of me thinks “what a great business!” But then I remember that it only works because of ignorance and irresponsibility. In fact, I’m not sure I can come up with a good argument or scenario to show why it is worth it to pay four times as much for things in order to have them right now, so I might have a hard time with the sales part of the business.
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Tags: insanity, rent to own