Rent To Own: The Very Few Pros and Many Many Cons

More and more we are seeing ads for Rent-to-own (RTO) stores. The allure is pretty reasonable actually, they offer you products you need at small manageable payments. Here is the overview, RTO agreements typically consist of a contract that is renewed on a weekly (78 weeks) or monthly basis (18 months). When each period ends, you have the choice to cancel and return the product (rent) or continue to pay until the contract comes to an end and the product is now yours (own).

RTO can be especially helpful to first time home buyers in the Windsor real estate market. After searching through the Windsor homes for sale, they found one, but now have to furnish it. How great does a couch, love seat, and TV for $75 a month sound? Sounds like a steal right, like it’s almost too good to be true. Well, it sounds like that because it is. Let’s take a look at the very few pros and many more cons to RTO.

One advantage of RTO is the one we just discussed, it is affordable monthly and you get the item upfront when you sign the agreement, and typically they come with no credit checks. That’s it. That is where the pros end.

These “advantages” come at steep cost, literally. By purchasing through RTO, you are choosing maybe the most expensive way to buy. We are talking about these items costing you three to four times the retail cost when all of the payments are made. Don’t forget other possible expenses like late payment charges. Let’s look at an example. Say you sign up to pay $100 month for a television set that costs $600 retail, after 18 months on contract you would have paid $1,800, three times the cost of the tv at a store. Don’t forget repossession, because if you fail to make a payment, the RTO company can look to repossess the item. If you save that $100 a month, you can afford that TV in 6 months, with cash, owned by you immediately. Under some conditions, even using a credit card to finance the purchase would prove to be less costly than what a RTO agreement would cost you. Some credit cards even offer payment plans now like the Triangle card from Canadian Tire.

You have better options, use RTO as a truly last and only resort.

Here at Jump Realty our agents will give you honest advice on what course of action is best for you in their professional opinion and will always put taking care of your best interests first! With offices in Windsor, Tecumseh, Kingsville, LaSalle, Harrow, Chatham, and Leamington, no matter where you are, a Jump agent is ready to help. Please contact us for any housing needs and let us give you a better real estate experience!