Buy This $300 TV for ONLY…… $700?

2.3 percent of U.S. households had used rent-to-own transactions in the last year, and 4.9 percent had done so in the last five years.
• Seventy percent of rent-to-own merchandise was purchased by the customer.
• Seventy-five percent of rent-to-own customers were satisfied with their experience with rent-to-own transactions.

Merchandise purchased from the rent-to-own store was rented for an average of 14 months before being purchased, with 47 percent being purchased in less than a year.
• Nearly half of all rent-to-own customers had been late making a payment (via)

It is amazing how in our desire to achieve the “American dream” we have lost our patience and become blind to reason. Instead of saving for an item, looking through 2nd hand stores, curbside cast-offs, friends or doing without, we have found ourselves in a position where we sell our ourselves to the first person who can give us what we want. NOW!

Rent-to-own stores are the answer to this impatient blindness. If you are waiting on furniture to come in from a move and need something for company, I can see renting tables and chairs for the week you need them. But that is not the intention of most people who walk into RTO stores. People go in because they don’t have enough money saved or their credit isn’t good enough for the local furniture store. Unfortunately, they suffer for this decision.

Here are the options for your TV
Option 1:
Save $300 and go to the local big box store to purchase. No extra money. If you are lucky, you can pay layaway for a few months. But there are no extra charges.
Option 2:
8.50 a week for 78 weeks (18 months)
Plus an additional down payment/processing fee/delivery of 37.00
A total of 700.00

You can certainly pay more than the amount; however, most is still broken down by the week, so you are just paying the same amount. Meaning, your money doesn’t go toward principle, but to pay the full $700 you agreed to.

Sadly, when people walk into these stores, they are only looking at the weekly/biweekly or monthly amounts they have to pay and not the full amount they have paid over the long haul. I can recall going into one such store with some friends and they saw a cool couch they liked for only 23.75 . I had to bring up the fact that they would be paying almost 95.00 a month and if they just saved that amount each month for 5 months, they could buy a brand new one for elsewhere, whereas, they would STILL be paying on the sofa long after.

Something to also keep in mind is that not all items are brand new, sometimes you get used items, repossessed or wholesale, low quality items. If you do your math, you will thank yourself for holding off and not giving into the desire for instant gratification.


  1. Karen @ Abundance on a Dime // Friday, August 20, 2010 12:32:00 PM  

    I've never understood why people do rent-to-own; it's such an incredibly bad deal! If you need an item urgently, you can almost always find something free or nearly free to make do with by using Freecycle, Craigslist, Kijiji and asking around to friends and relatives, until you have saved money to buy a better quality item.

    No money down, don't-pay-for-a-year are almost as bad. My theory is, if you don't have the money now, you're not going to have it later either, so don't fall for this! It's huge interest if you can't pay it at the end of the no-pay term, plus I've heard tons of stories of people who DID pay at the time it was due and got caught in some crazy loopholes and ended up getting charged tons extra. So not worth it!!!

  2. HollisKC // Saturday, August 21, 2010 5:04:00 AM  

    Rent-to-own is crazy and this does highlight the "instant gratification" mentality we have today. It is similar to buying a big ticket item with a credit card, paying the minimum and the 25% interest for 5 to 10 years. Most people don't look at the total cost.

  3. Hammy // Saturday, August 21, 2010 8:43:00 AM  

    If you can't afford it in the first place and can't afford to wait then you certainly can't afford it. I've never been a fan of the rent-to-buy crowd as they prey on those that can least afford it - it's not like they are really doing these people a service. They're just another form of loan shark. A bit of simple maths that could be taught in school would wise people up to these tricks.

  4. Annie // Monday, August 23, 2010 10:19:00 PM  

    Omigosh! I know several people who live for rent-to-own! The last thing I bought there was a portable washer (used) because I didn't have the money for a new one and I knew how bad they broke down (and no room for a full-size).

    I paid a total of around $250 for it, but they had to end up replacing the motor twice, at a cost (according to the tech they sent out) of almost $200 a service call.

    One friend of mine finally listened to me and realized that he still owed over a thousand on his big-screen tv after paying on it a year, and could spend several hundred less and get a brand new one!

    Not only did I go shopping to watch them buy it, but I went with them to see the look on the rental employee's face when this long-time customer turned in his last device!

  5. jeadly // Thursday, September 02, 2010 1:19:00 PM  

    Layaway? I'm not sure stores will do that any more; and certainly not for electronics. Locking in the higher early-adopter price isn't really a good deal for consumers; and not selling a rapidly obsoleting technology good isn't something most stores want either.

    Just save up for a tv, and when your goal is met walk in and buy however much TV $300 will buy.

    (and by walk in, I mean research online and purchase)