Rent-to-own stores offer cash-strapped consumers the ability to take home a new refrigerator, living room furniture set and hundred of other items by allowing them to pay a little each month. But, as we’ve reported in the past, what seems like a convenient years-long payment plan often adds hundreds – even thousands – of dollars to the price tag of a product. To ensure potential customers of rent-to-own stores know what they’re getting into, our colleagues at Consumer Reports put together a helpful video spelling out the potential dangers of such retail models.
The video warning is the result of CR’s review of several offers from the nation’s two largest rent-to-own stores – Aaron’s and Rent-A-Center – that found some of the monthly payment plans could cost customers hundreds of dollars more than they would spend purchasing the product outright.
“If these were loans, the equivalent interest rate would be between 50% and 150%,” Mandy Walker, money editor for Consumer Reports says in the video. “There’s lots of fine print in the ads and in contracts, and many consumers just don’t realize the full cost.”
That was the case for a Georgia woman who purchased a washer and dryer set from a local Aaron’s store.
The woman says she signed a 24-month lease that included an option to buy the appliances at the listed cash price within 120 days.
She tells CR that she had the funds available, but when she went to the store to pay, an employee told her she’d missed the deadline.
That left her on the hook for the entire 24-month lease, which would total $3,671 – twice the amount she would pay at a big box store, CR reports.
A representative for the industry’s Association of Progressive Rental Organizations tells CR that such companies offer the “only debt-free transaction that allows the customer to return the product at any time for any reason without legal penalty and affecting the consumer’s credit.”
But returning the washer and dryer set wasn’t an option for the Aaron’s customer, as she’d already paid more than $2,000 for the appliances.
CR advises potential rent-to-own customers to read contracts carefully and make sure they can afford to make on-time payments.
“Better yet, save up your money and pay up front,” Walker says.
CR reports that the Georgia woman’s story ends on a bit of a happier note. After the organization publicized her ordeal, Aaron’s forgave her the last four months of the lease and sent a letter telling her she owned the appliances outright.
The company even sent along a coupon for 50% off the first payment of her next purchase at the store, a deal she says she won’t be using.
by Ashlee Kieler via Consumerist
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