Rent-To-Own Stores: The Pros and Cons of Using Them

Rent-To-Own Stores: The Pros and Cons

Rent-to-own (RTO) stores sell you items such as furniture and appliances on a payment plan. These RTO agreements usually consist of a contract that is renewed on a weekly (78 weeks) or monthly basis (18 months). At the end of each period, the customer can choose to renew or continue the contract or they return the item. If the customer chooses to continue the contract, so do the payments until the full price of the item is paid. At that time ownership of the item is handed over to the consumer, but additional fees could be charged for things like late payments, delivery, and insurance.

One advantage of these stores is that consumers can get merchandise quickly. Often the product can be had the same day that they go into the store. A second advantage is low weekly or monthly payments and normally there is no credit check.

These few advantages come at a steep cost, however. Purchasing goods from these stores is one of the most expensive methods of ownership. These items end up costing three to four times the retail cost when all of the payments plus possible other expenses are totaled. Here is an example, if someone pays $10 a week for a television set that costs $250 retail, they would have paid $780 at the end of a 78-week contract, or roughly three times the retail cost. Customers also face the possibility of having an item repossessed if they fail to make all their payments. If you save that $10 a week, in only 25 weeks, they could have saved enough to buy the TV outright with cash. Even using a credit card to finance the purchase would probably cost less than what a RTO store would charge.

Here at Jump Realty, all of our agents put their customers' needs at the forefront of their work. They’ll give you honest advice on what course of action is best for you in their professional opinion. Whether you are buying or selling our agents are looking out for you first. All of our agents pride themselves on putting their clients' needs above all else. With offices in Windsor, Tecumseh, Kingsville, and Chatham, 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!