In the past decade, many rent to own retailers have opened up shop across the country. These companies bill themselves as an easy way for consumers to get the things that they want without having to apply for a credit card. On the surface, it seems like a great idea for consumers and many people flock to these retailers for that reason.
Unfortunately, many of these consumers are later blindsided by the things they didn’t realize were in the rent to own contract that they signed. Signing a rent to own contract without fully understanding how these businesses work can result in the loss of a significant amount of money as well as the loss of the items you were renting. Here are some things you should know about rent to own contracts.
You Will Pay More Than Retail Value
When signing a rent to own contract for merchandise, you are agreeing to pay more than market value over time to purchase the merchandise. If you total up the cost of all of the payments you would have to make to purchase the item you are renting through the rent to own contract, you would find that it is costing you double the retail value of the item, or more, to complete the entire contract. You would save a lot of money by saving up for the item and purchasing it outright from a retailer. Rent to own companies are banking on consumers not being willing to wait to save up the money and wanting to have the item in their possession right away.
You Don’t Get Any Money Back
If you sign a rent to own contract and are unable to purchase the furniture at the end of the agreement, you do not get any of your money back. Even though you may be paying twice what the item is actually worth, if any payments are missed the company has the right to repossess the merchandise and keep all of the money you have paid towards its purchase. If you are more than halfway through the time period needed to purchase the merchandise through the company, you may be losing more money than you would have paid for the item in a retail store.
It Doesn’t Help Your Credit Score
Many people mistakenly believe that entering into a rent to own contract will help their credit score if they make all of their payments on time. Most rent to own companies do not perform credit checks or report payments to credit monitoring companies, so your activities with the rent to own company will not affect your credit positively or negatively. Be sure to read all of the information available for the rent to own contract completely to ensure that you know all of the details of the contract before you sign anything.