We have all heard that knowledge is power.
Taking a moment to understand the facts about Rent-to-Own programs will assist you in making informed decisions and pay dividends today and in future endeavors.
Rent-to-Own as an option to traditional retail or credit plans provides another possible solution for obtaining products and services such as Furniture, Appliances, Home Electronics, and many other items.
Rent-to-Own may be better described as Renting with an Option to Buy.
The option to buy part provides multiple options that affect the total cost based on when the option to buy is actually exercised.
People have different needs.
There are long and short-term considerations.
A few to think about are: ·How quickly do I need the item? ·How and when will it be delivered? ·What costs are involved with delivery? ·How long do I need use of the item for? ·Am I interested in the use of the item or do I want to own it? ·What kind of warranty do I get? ·Do I want to be responsible for service and repairs? ·What cash or credit terms are available? ·Is interest charged and what is the rate? ·What are the options available to buy the item and how do they work? ·Is there an early buy-out discount? ·Is there a prepayment penalty? ·What about 90 days same as cash? ·What additional costs are involved? ·What will my total cost be? ·Can I return the product at any time with no further obligation? The answers to these questions are some of the determining factors that will help identify what will be best to fit your individual needs.
Answers to all of the above questions are clearly spelled out in what is known as the Rental Agreement.
Terms vary slightly from company to company and state-to-state based on legal requirements.
But they are basically the same as to what type of options and benefits are offered.
Following are a few examples of Rent-to-Own solutions.
Many times a person in need of a refrigerator needs it now.
They may have food that will spoil if they can't get it quick.
Perhaps the old one just gave out and they have a freezer full of meats and a fully stocked refrigerator.
The typical retail solution will involve paying in full or using credit sources for a new one.
The delivery will arrive in roughly a few days to a week later.
The cost of delivery will add $ 35.
00 to $ 75.
00 extra to the unit purchase.
Also, you might be interested in an extended warranty for another $ 50.
00 to $ 100.
00 additional cost.
This compares to a Rent-to-Own solution that can provide a refrigerator delivered today with no delivery charges applicable.
Yes, free delivery, in your home today.
The cost of delivery is part of the cost of lease services and built into the service being provided to the customer.
RTO stores deliver refrigerators to folks that need them everyday.
The typical out of pocket expense to get a refrigerator delivered and installed to your home today is about $ 20.
00 from most RTO stores.
And you don't need the cash or credit beyond that to buy it.
At this point, you would have a refrigerator in your home solving your immediate need for one and have spent only $ 20.
00 (about the cost of a large 2 topping pizza or 1 evenings parking fee at the basketball game).
The options available would consist of using it for the short term, which could be for as little as a week or you would also have longer term options available including 90 days same as cash, an early buy-out discount available at anytime during the rental, or continuing to make weekly, bi-weekly, or monthly payments.
The following is a real life example using the actual numbers in dollars and cents from an actual Rental Agreement for the rental of a brand new Whirlpool 18 cubic foot refrigerator.
This example should clear up some confusion about what the Rent-to-Own option is really offering and how the total cost associated with the product and services related to the transaction are determined.
The consumer would make the decision on how the program best meets their needs: ·Cash Price Total..
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$ 779.
61 ·90 Days Same as Cash Price..
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$ 779.
61 ·Weekly Rental Rate is..
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$ 19.
99 ·Maximum Term in Weeks..
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# 78 ·Maximum Total Cost Based on Paying Maximum Weeks..
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$ 1559.
22 ·Bi-Weekly Rental Rate is..
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$ 39.
98 ·Maximum Term Bi-Weekly..
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# 39 ·Maximum Total Cost Based on Paying Maximum Bi-Weekly..
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$ 1559.
22 ·Monthly Rental Rate is..
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$ 73.
99 ·Maximum Term in Months..
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# 18 ·Maximum Total Cost Based on Paying Maximum Months..
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$ 1331.
82 ·Early Buy-Out Option..
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50 % The difference between the cash price and the maximum total cost is considered the cost of lease services.
The cost of lease services includes costs associated with delivery and set-up of the item, any service and repair or replacement of the product should it be required for the entire rental period not just the manufacturers warranty period and includes all parts, labor, transportation, trip fees, etc.
, If the product cannot be repaired the day the malfunction is reported then it will be replaced the same day with a working item of equal value or a loaner unit.
Renting an item does not require any minimum in time or money and the consumer has the right to cancel by returning the property at any time without any further obligation, penalty, or cost.
The Early Buy-Out option works like this; let's say you have been renting the unit for the past 8 months.
You will have paid $ 591.
92 in rent.
Fifty percent (50%) of the rent paid, or $ 295.
96 is subtracted from the original cash price of $ 779.
61, the difference of $ 483.
65 is what you would pay to exercise your early buy-out option and take immediate ownership of the property.
In this case, rent paid of $ 591.
92 plus the early buy-out cost of $ 483.
65 would equal $ 1075.
57 total invested in the product and services associated with obtaining ownership in the property.
That is a savings of $ 483.
65 compared with making weekly payments for the maximum term of 78 weeks.
The value of paying the maximum term for some is that there is no worry about service and repairs for a longer time period.
Considering the real costs of a repair that can make sense.
How much will it cost to possibly need to take off a day at work to wait at home from 9 to 5 for a service provider to arrive? There will most likely be a trip fee or minimum cost involved, and on top of that, parts may need to be ordered.
It could take a couple weeks or more to get the parts and schedule the repair.
What do you do in the meantime? Manufactures don't provide loaners during the warranty period much less out of warranty.
So you would be without, or again looking for a replacement.
The Rent-to-Own "Scam" may or may not work for your situation.
Whether you need a refrigerator, washer and dryer, HD television, computers, living room, bed room, dining room furniture or a variety of other items you will find these options and more available to you at Rent to Own Stores locally just about everywhere.