Rent to own not always the best option
Rent to own businesses target individuals that cannot wait to purchase items such as a couch, TV, or appliance. Rent to own businesses typically charge up to three times the original cost of the item.
Are you struggling to stay within your monthly spending plan? Consumers need to be aware that at times some financial industries work to target individuals and families that are under financial stress. The rent to own industry is an example of a business that works to persuade individuals and families into agreements that may not be in the best interest of their budgets.
How do rent to own businesses work? The rent to own business enters into an agreement with an individual for an item such as a piece of furniture, appliance, or electronics that the individual feels they do not have enough money to buy outright. The rent to own agreement is more expensive than the actual cost of the item if you were to purchase it on your own.
Items are typically paid for on a weekly basis. The cost of the item plus interest is broken down over a one- or two-year period. By the time an individual has completed the agreement, they have paid the company up to three times the cost of the item. Another problem with rent to own agreements are once you miss one payment, the store can reposes the item you are trying to purchase and you will lose all the money you have invested in buying the item. Depending how long you have paid on the item, you could lose a significant amount of money.
A person could save a substantial amount money if they tried other means of obtaining the item they feel they need. Michigan State University Extension suggests that first you take time to think about why you are purchasing the item and decide if the item is truly needed or if the item is something you just want and you don’t want to wait to save for it.
Try and hold off on items that are wanted verses the items you need. If you are still looking to purchase the item, think about setting up a small savings plan just for that item. Put a small amount of money aside each month until you have enough to buy the item. Or consider purchasing the item from a second-hand store.
Often, furniture stores and appliance stores run their own “gently used” shops where second-hand items can be purchased. You can save a lot of money by considering buying second hand. Another popular way of obtaining needed items is to monitor your local rummage sales. If you get to a rummage sale early, you will have a good chance at purchasing items identified in their rummage sale ad.
Remember, before you decide to rent to own, first think about what is driving you to obtain the item. Ask yourself if it is a want or is it a need for you or your family. If it is a need, ask yourself whether you could obtain the item in a cheaper manner. By thinking ahead, you could save yourself a considerable amount of money.