Rent-to-own purchases are very popular. Especially in today’s economy, with so many families cutting back and in the throws of an economic recession. Rent to own stores generally set up shop in poor, low income neighborhoods and cities. This is to attract unsuspecting buyers in desperate situations.
The way a rent-to-own contract works, is the purchaser can buy things such as furniture, appliances, big screen televisions and other electronics withvery little money down and no credit check. This makes it very appealing to people who don’t have very good credit and not a lot of cash available. Usually the contract is set up with monthly or bi-weekly payments. Another contributing factor of the contract that is attractive to prospective buyers is the fexibility of it. If the buyer cannot make the payments for the merchandise or just wants to return the item, there is no penalty and the buyer is not liable for the remaining payments on the contract. This may be a ideal situation for people that are in a temporary situation, such as renting a home or a apartment, because there is no negative rating on their credit report. While this may sound appealing, there are plenty of problems that counteract the upside of these types of purchases.
The biggest and most concerning problem that plaques buyers is the interest rate. The interest rate usually exceeds 100 percent. The buyer never gets disclosure of the interest rate which is a deceptive practice. Another area of concern is the prices charged by the rental store for the item, which can be two or three times the retail price and sometimes more. Consumer reports have found that most of consumers are unaware that they are purchasing items at these rates. In a recent survey of rent to own customers, conducted by the Federal Trade Commission found that 19percent of customers were dissatisfied with their experience, and most noted the prices as the reason. Complaints about high prices were made by 27 percent of customers, including nearly 70 percent of all dissatified customers.
Consumer advocates have raised concerns over the terms and conditions of the rental agreement and the disclosure of whether the merchandise is new or used. Forty-six states currently have rent-to-own laws that regulate rent-to-own transactions, mandating a variety of disclosures and other requirements. There is no federal law currently that regulates these types of transactions. Other questions have been raised over the treatment of customers after the purchase. Some customers have complained of unfair and abusive collection practices, such harassing phone calls and in extreme cases unauthorized entry into customer’s homes.
In conclusion, any regulation whether state or federal would be an advantage to the consumer of the rent-to-own purchases. Regulations would ensure that all customers have the information and protection for purchases. Most consumers would be better off buying cheap, used furniture and appliances or waiting until the appropriate amount of money can be saved for a full purchase through a reliable dealer. Discount furniture stores, flea markets, yard sales, estate sales and thrift stores may just have what you need, so just shop around and you may be able to save yourself alot of money.