Rent To Own, from Life in the USA: The Complete Guide for Immigrants and Americans

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Life in the USA
Public Services I

Rent To Own
Companies that advertise as “rent-to-own” generally cater to lower income customers who for one reason or other lack the funds or credit to buy items such as furniture or electronics outright. In exchange for delivery of the product, the customer will agree to make weekly or monthly payments for a specified period of time; at the end of the period the customer takes ownership of the product, possibly for the payment of an extra fee. Most consumers who enter in to these agreements do so with the intent of purchasing the item. If the customer falls behind on payments, the seller usually has the right to take back the product without refund of money already paid. While rent-to-own is essentially a credit purchase in most cases, because the product is technically delivered on a rental basis the transactions usually do not come under strict federal or state disclosure and usury laws regarding credit and installment sales.

Rent-to-own is convenient for lower income people, but also very expensive over the long run. Consumer advocates complain that the purchaser may end up paying as much as three times what the product would normally cost in a cash or standard credit purchase. They claim that rent-to-own companies exploit lower-income and minority consumers, even that they deal in inferior and sometimes used merchandise. For a lower income person with no credit, however, spending $8.00 a week for a television delivered immediately may seem a better alternative to no television at all, even though final payments for a $200 television may equal $600 or more. The rent-to-own industry certainly attracts dishonest players, but many reputable independent, chain and franchise operators claim they provide a valuable service by offering products low-income people would otherwise not be able to obtain. As a consumer, it pays to approach any prospective rent-to-own transaction with care.

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