Looking for an affordable way to buy that new refrigerator or living room set? Shopping at a rent-to-own store may seem like the best option if you’re short on cash. But Consumer Reports warns that some of those so-called deals could end up busting your budget.
Consumer Reports took a close look at some offers at the industry’s two biggest chains: Rent-A-Center and Aaron’s, and found that their monthly payment plans could cost you hundreds of dollars more than paying outright. If they were loans, the equivalent interest rates would be 50 to 150 percent.
A spokesperson for the rent-to-own industry, from The Association of Progressive Rental Organizations, says it offers an important service and is “the only debt-free transaction that allows the customer to return the product at any time for any reason without legal penalty and affecting the consumer’s credit.
The high prices may not be the only downside of rent-to-own. The major chains have been accused of violating consumer laws in California and Washington, including abusive collection tactics and charging improper late fees. The retailers settled those cases without admitting any wrongdoing. If you have any issues, you can file a complaint with your state attorney general.
Consumer Reports’ advice: If you decide to shop at a rent-to-own store, you need to take a close look at your contract, and make sure you can actually afford to make the payments on time. Even better, save up your money and pay upfront.