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5 Top Reasons to Avoid Rent-to-Own Schemes - June 2016
They've been on TV a lot recently - rent whatever you need and at the end of the rental period pay the balance and own it. Sounds like an easy way to get the new washing machine you want or that brand new smart television. But rent-to-own programs can cost you a large amount of money and leave you disappointed.
Before you sign a rent-to-own contract, consider these details:
Used Rental Items
Many businesses rent used items. You may be paying a premium price for something that's not brand new. If you must go ahead with this scheme make sure you're getting a brand new, up-to-date model.
High Interest Rates
Rent-to-own companies have high interest rates on their products. You may be paying 100% or more in interest. Again, if you must go ahead with this scheme, check the interest rate carefully. Read the fine print on the contract and if you are unsure get someone you trust to go over it with you.
Long Payment Plans
You may be stuck in a long payment plan that costs you even more in interest.
Hidden Fees
Some companies charge extra fees for returning an item or damaged items. Again, read the fine print carefully. If you have any questions write them down so you don't forget them. And write down the answers so you don't forget them and there is no misunderstanding.
Confusing Contracts
Complaints about confusing contracts are common. Many contracts are long and difficult to understand. Read it, then get someone else to read it with you to be sure you understand exactly what it says. There are times verbal definitions are not the same as the contract.
Renting your furniture or computer or television may not be the best financial option for your situation. If you decide to rent-to-own, it’s important to read the fine print so you’ll be familiar with the details and requirements of your plan.
A better option to rent-to-own is to price the item you want, then save up for it. You may need to wait a little while, but the wait is worth it. You'll have cash when you go to buy it, giving you bargaining power and you will actually own it outright, saving a fortune in interest and the worry of having to make those monthly payments.
When you know the final price, decide when you want it (other than right now!). Work out how many pay periods you have until then and divide the price by the number of pay periods. That will give you the minimum amount you need to save each pay to reach your goal. Of course you can always add any extra or spare cash to your savings to reach your goal faster.
Before you sign a rent-to-own contract, consider these details:
Used Rental Items
Many businesses rent used items. You may be paying a premium price for something that's not brand new. If you must go ahead with this scheme make sure you're getting a brand new, up-to-date model.
High Interest Rates
Rent-to-own companies have high interest rates on their products. You may be paying 100% or more in interest. Again, if you must go ahead with this scheme, check the interest rate carefully. Read the fine print on the contract and if you are unsure get someone you trust to go over it with you.
Long Payment Plans
You may be stuck in a long payment plan that costs you even more in interest.
Hidden Fees
Some companies charge extra fees for returning an item or damaged items. Again, read the fine print carefully. If you have any questions write them down so you don't forget them. And write down the answers so you don't forget them and there is no misunderstanding.
Confusing Contracts
Complaints about confusing contracts are common. Many contracts are long and difficult to understand. Read it, then get someone else to read it with you to be sure you understand exactly what it says. There are times verbal definitions are not the same as the contract.
Renting your furniture or computer or television may not be the best financial option for your situation. If you decide to rent-to-own, it’s important to read the fine print so you’ll be familiar with the details and requirements of your plan.
A better option to rent-to-own is to price the item you want, then save up for it. You may need to wait a little while, but the wait is worth it. You'll have cash when you go to buy it, giving you bargaining power and you will actually own it outright, saving a fortune in interest and the worry of having to make those monthly payments.
When you know the final price, decide when you want it (other than right now!). Work out how many pay periods you have until then and divide the price by the number of pay periods. That will give you the minimum amount you need to save each pay to reach your goal. Of course you can always add any extra or spare cash to your savings to reach your goal faster.