Is Rent-To-Own a Good Option?

Do you need a new television? Kitchen appliance? If you are thinking about buying one through a rent-to-own contract, keep reading.  At first, a payment of $16 every two weeks sounds like a great deal for a flat screen TV with a purchase price of $300. But wait a minute, $16 every two weeks for two years (a popular option for rent-to-own contracts) comes out to $832.  What happens if you miss a payment? The rent-to-own store usually repossesses the item from you immediately. It probably will not matter if you already have paid in more than the item is worth.

Many people enter a rent-to-own transaction because they have bad credit and are trying to establish a credit history. However, rent-to-own does not help you to establish credit. Companies that offer rent-to-own typically do not report payments to a credit bureau.

Maybe you think rent-to-own is your only option. With a little patience, there are other ways. Ask yourself these questions:

Can you delay the purchase until you can save enough money to pay cash for the item you want? In the example above, paying cash would save you $532?

Is there a retail store that offers a layaway plan for the item? Layaway plans usually require you to pay ten percent down plus a small layaway fee. They you have three months to pay off the balance.

Have you applied for credit to buy the item from a retail store? Getting a credit card or installment loan from a department or big box store is often easier than getting a major credit card. The interest rate is typically higher than for a bank loan or credit card. Minimum payment requirements are often higher, too.

Would a bank or credit union loan you the money? Getting a loan is easier with a good credit score, a co-signer for the loan, or some kind of collateral. Higher credit scores (720 and above) make it easier to find a loan and will reduce the cost of borrowing.

Does the item you want to purchase have to be new? Check garage sales, classified ads, second-hand stores, pawn and repair shops. You might find a nearly new item for much less than you would have to pay if you were to buy it new.

Considering these options before you sign a rent-to-own contract will help you save money.

By Joanne Cavis
UGA Cooperative Extension


About Save a Dime on 9

Save a Dime with 9 is part of WTVM's continuing effort to reach out to the community. Our ConsumerWatch team is constantly digging for deals and information that can help you and your family stretch your dollar. There are lots of other good savings blogs and websites out there, but Save a Dime saves you time and money because we're a one stop shop. Where else can you get free tax advice, tips on couponing and even the scoop on the latest tech gadgets all in one place? The're here! So let's start our savings journey together. If you have a blog idea for us, send an email to Please include a phone number so that we can reach you, if necessary.
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