Rent To Own Items Users Guide – Benefits & Drawbacks

Try before you buy

Rent to own deals encourage you to sign up now and have your items delivered tomorrow. If you’re low on funds, you might feel this is a great offer. But if you choose to shop this way, you can have bigger debts in the long run.

  • How rent to own works
  • Read your credit contract
  • Is rent to own the best option for you?


How rent to own works

You rent a new or pre-used item (like a refrigerator or television) for an agreed-upon period of time. You make regular rental payments, typically on a monthly basis, for two to three years. You aren’t using the goods, but rather, making the commitment to purchase them. At the end of the rental period, you pay the final amount to finalize your purchase.

The real cost of rent to own

Over time, the total payments you make through renting will always add up to more than the cost of the item- sometimes a lot more. You may also have to pay fees and charges to even take advantage of this purchasing method. It can easily soar over the cost of buying the goods outright with a different form of credit, like a low interest loan.

Check your ownership

With a rent to own contract, you own the goods from the beginning of the contract. You also own a debt to the supplier of the goods (the creditor) who will take a bill of sale or mortgage over the goods you’ve purchased. There are different types of contracts with differing terms, so check with the store, merchant, or creditor to find out if you have the right or obligation to purchase. See consumer leases for information about lease agreements.


Be aware of your responsibilities

If the item you are rending is damaged, stolen or destroyed, you still have to maintain your rent on in. You may have to take out insurance to cover the cost of replacing the item. Sometimes this is a condition of the agreement.

Read your credit contract

If you decide to go the route of renting to owning, know what you’re getting into by checking all the terms and conditions of the agreement before you sign anything. See credit contract for more information.

Find out if you’ll be charged account-management fees and penalties if you miss your payments, break the agreement, or pay it off early. If you break your agreement, you may still have to pay an amount equal to the rental payments for the full term of the agreement. This applies even if you return the goods you were renting.

Also check how much you’ll have to pay at the end of the rent to own agreement to buy the item outright.


Is rent to own the best option for you?

A rent to own deal is tempting, but be cautious about impulse purchases and watch out for high-pressure sales tactics. Don’t sign anything on the spot. See avoiding sales pressure for more information.

Explore all of your purchasing options. You might be better off saving up to buy the item instead. See saving for tips on how to do this.

When rent to own may be a good idea

Whilst there are numerous high costs and financial implications with rent to own services. There are also scenarios where this service can be useful. A few different situations may include:

- If you have poor credit and are unable to qualify for essential household needs elsewhere.
- If you have poor credit a account may be able to help establish a positive payment history.
- There can be flexibility if your financial circumstances change for the better or worst. A boost in income may allow you to buy out the product. A down turn with finances can allow you to return the product without credit implications.

Always make sure to review the terms carefully to ensure no future shocks.

Consider layaway

Layaways allow you to pay for an item with installment payments, but unlike rent to own deals, you won’t have interest, fees, or charges. You may also get a discount if you make your payments with cash. The only downside is that you do not get your item until you pay it off.

Stay out of debt

If you struggle with paying your debts, contact your lender right away to discuss your options. See trouble with debt.

Rent to own may appear to be a cheap and easy solution when you need something quickly. But be aware of the true costs of this kind of credit before you sign up.