Why do people rent to own?

starving_student · #1 (**permalink**) 11-03-2006, 09:14 PM

There was an add in the mail about one of these rent to own store. I saw a pretty table for 145 and thought wow what a deal. After looking more carefully, it was 145$ A month for 18 months (2610$ for a damn table!!!) or 1800$ if paid cash. Ok the table was pretty but who in their right mind would pay 2600 for something which at best is worth 1800 and in reality much more less???

I guess I could try to understand if someone did this because they badly needed a car despite a bad credit but who ever badly need a table??? There are tons on sale on craigslist for less than 200$ and any decent furniture store has plenty of option for less than 1000$. As most furniture store have do not pay for 2 years policy, one can just put aside the money everymonth (1800 is 75$ a month for 2 years) and pay in full at the end.
How can anyone be so stupid as to fall for these rent to own thing is beyond my understanding.

Snoopy2645 · #2 (**permalink**) 11-03-2006, 11:11 PM

I dont know why people would do this I know when I was looking at bunk beds for my girls I seen some I like in one of those rent to own places & they were crazy for the price I about fainted I just noticed them because they were in a window & the rent to own place was next to walmart. I used to know people who would do that with tvs but they are so cheap these days who would think of it ya know?

I guess the poorest of the poor!!! I worked today in a store doing a demo that brought a whole new meaning to the words TRYING to GET BY@@ I met people who had paid all thier bills today with their SSI check & had to sell thier own TV to eat the rest of the month!!! Very sad makes you thankful for what you got!!!

PRICEPLUS · #3 (**permalink**) 11-04-2006, 12:23 AM

When you have no credit and you haven't got a pot to piss in or a window to throw it out of you might understand the rent to own places. They provide merchandise to those who have no credit and they charge rates that would make a loanshark blush. Yes, screwing the poor is apparently acceptable!

I am sorry but the people who do this and the payday loans are the lowest form of life on the planet! You'd be quite surprised just how badly the poorest people in this nation are treated and how they are ripped off!

tgavin71 · #4 (**permalink**) 11-04-2006, 02:14 AM

We have similar programs here. "Take it home today, nothing to pay until 2008 or 2009 or whenever" The interest rates are ridiculous. About 25%. But and if it is a big but you pay it all off before you need to start paying you don't get charged interest. I have bought a few things by doing this. Granted you don't get the cash discount and you have to pay a small set up fee it is still cheaper than 16% credit card interest rates. You just have to be sure that you can pay it off in fall at least a month before the interest kicks in.

tinapbeana · #5 (**permalink**) 11-04-2006, 07:31 AM

Quote:

Originally Posted by PRICEPLUS

When you have no credit and you haven't got a pot to piss in or a window to throw it out of you might understand the rent to own places. They provide merchandise to those who have no credit and they charge rates that would make a loanshark blush. Yes, screwing the poor is apparently acceptable!

I am sorry but the people who do this and the payday loans are the lowest form of life on the planet! You'd be quite surprised just how badly the poorest people in this nation are treated and how they are ripped off!

car title loan places are even worse, b/c they can and will repo your car over a couple hundred dollars. there you are, no way to get to work.

poundwise · #6 (**permalink**) 11-04-2006, 07:41 AM

I think most people would be surprised at how closely most furniture stores buy-now, pay-later programs are to the rent-to-own places. When the interest rate kicks in at 20%, you'll pay $2600 for $1800 worth of furniture easily. Rent-to-own is not a good option, but its likely no worse than some other forms of credit/loans for such items.

One positive thing about the rental places is that you can get something you need or want for the short-term. That is, not rent-to-own, just rent.

tinapbeana · #7 (**permalink**) 11-04-2006, 08:43 AM

Quote:

Originally Posted by poundwise

One positive thing about the rental places is that you can get something you need or want for the short-term. That is, not rent-to-own, just rent.

a TV for a superbowl party, extra seating for the holidays....

i think you're right, PW, if folks used the 'rent' option moreso than the 'own' option, they would get better usage from these places.

LuxLiving · #8 (**permalink**) 11-04-2006, 09:08 AM

interesting article on predatory lending:

http://www.wweek.com/editorial/3219/7342/

OUGHTA BE A LAW, PEOPLE!!!!!!!!

Snoopy2645 · #9 (**permalink**) 11-04-2006, 09:15 AM

The sad part for me is is most of the people I seen yesterday didnt work because they didnt want to but because of mental & physical conditions very very sad really makes you think

Ima saver · #10 (**permalink**) 11-04-2006, 09:25 AM

I saw an ad about a rent to own computer. By the time you paid for it, you will have paid 3 times more for it, than it was worth. I think that people with credit that bad, really don't need a computer. a person I know was required to pay the court system $50 a month. Instead she bought a computer and paid $50 a month to that. She wound up being arrested for not paying her fine. Pretty stupid!

poundwise · #11 (**permalink**) 11-04-2006, 10:06 AM

The first part of your post illustrates my previous point. While I agree that rent-to-own is a bad way to go, the idea of paying three times over for a product, such as a computer, is actually commonly accepted. It happens whenever someone pulls out a store credit card and then makes minimum payments or follows a credit payment plan, such as issued through Dell Financial Services.

Both are equally bad. Actually the latter may be worse than rent-to-own. A person may wish they had paid only three times as much once they've had that Best Buy credit card for 5 years and the computer is far from state-of-the-art but they still owe $500 on it.

By the way, nothing against Dell or Best Buy specifically; I just used them to illustrate my point.

I think the bottom-line is that you get into trouble whenever you are trying to buy something you can't actually reasonably pay for. It is all a product of the 'buy now, pay later' mentality.

shelbylovesmelby · #12 (**permalink**) 11-05-2006, 10:47 AM

Rent to own is definatly not a good thing to do, if you are hoping to own the item in the long run.

I agree that the poor & people w/ no understanding of finance get taken advantage of daily. I want to say someone was trying to outlaw those pay day loan stores. You know those things are popping up around here faster than anything. And I've seen quite a few acct's go in the hole cause their pay day loan check came thru or they'd drain their acct everytime they got paid & the loan store was sol calling to verify funds day after day thinking they'd actually left the money in the acct.

I had a neighbor when I lived in low income houseing who's dh would go donate blood so they could buy groceries in between when they got their food pantry donations. Even worse their neighbor who is a whole other post would come over for food from them & if they didn't they got some pretty nasty threats. So they were feeding their family plus the neighbors on an income from a pizza parlor!

Poverty is so easy to fall into but to hard to climb out from once you are there the hole can get pretty deep.

JBinKC · #13 (**permalink**) 11-06-2006, 04:57 PM

I agree it is just taking advantage of what I call the fringe society and the expensive cost of high risk debt. There are plenty of businesses that cater to them like title and payday loan places, pawn shops, franchised tax preparers and high risk car credit places.

It is sad but there are so many people blindsided of what is happening to them. If you really look at it closely our society really borderlines becoming a feudal system again where the CEOs (who are paid 500 or more times than the average worker up from 40 times in 1980) of today live like pharoahs while the masses are enslaved. And they are dumb enough to vote for the same parties that just tweak the pain threshhold one more notch the next go around.

glennkawesch · #14 (**permalink**) 11-07-2006, 11:57 AM

Rent to own stores are a tax on the poor.

Live by this simple rule....PAY CASH OR DO WITHOUT!

Glenn Kawesch

shelbylovesmelby · #15 (**permalink**) 11-07-2006, 01:19 PM

Quote:

Originally Posted by glennkawesch

Rent to own stores are a tax on the poor.

Live by this simple rule....PAY CASH OR DO WITHOUT!

Glenn Kawesch

I love this rule too bad my dh doesn't believe in it. He believes in the I want it now & I don't care what I have to do to pay for it (ie the credit card or mooch'n from savings) =

tinapbeana · #16 (**permalink**) 11-07-2006, 01:34 PM

Quote:

Originally Posted by shelbylovesmelby

I love this rule too bad my dh doesn't believe in it. He believes in the I want it now & I don't care what I have to do to pay for it (ie the credit card or mooch'n from savings) =

wow, shelby, when did you marry my husband?

seriously, that description sounds just like the difficulties i have w/ my DH, and it's currently driving me up a wall. do yo have any tips/tricks/prozac?

shelbylovesmelby · #17 (**permalink**) 11-07-2006, 01:41 PM

Quote:

Originally Posted by tinapbeana

wow, shelby, when did you marry my husband?

seriously, that description sounds just like the difficulties i have w/ my DH, and it's currently driving me up a wall. do yo have any tips/tricks/prozac?

*LMAO* I'm glad I"m not the only one who has that problem. A good credit rating is our enemy in a matter of speaking. Um... how bout reducing the limit on your credit card? That's the only thing other than guilt that works for me. "Hun I had to put back that sweater that was on clearence, we can't afford it this week, I know I like it & I NEVER buy anything for myself but you see you had to buy that MP3 player & there isn't even grocery $ left" Ya know something like that. He tells me to quit it & just buy what I want, sure if filing chapter 7 in the next 6 mo's & moving our family into his parents basement sounds like an option!!

GrimJack · #18 (**permalink**) 11-08-2006, 10:50 AM

Well, my 2 cents worth is to remind you all that your mortgage is pretty much rent-to-own and you end up paying 3 times its worth - possibly even more if you got caught up in the housing bubble and have an ARM (some people even have an ARM that is 100% interest!).

GrimJack

ps I actually do know the difference between financing a house and financing a TV; an important point is that if you finance anything!! besides a house, you are losing (and you better not accept financing a house as a no-brainer).

pps - just in case the point is not clear - if you borrow money to buy a car, you pay mostly principal and 'earned' interest; if you finance a car, you pay all the interest first then start paying for the car and you go quickly upside down and owe more than the car is worth.

poundwise · #19 (**permalink**) 11-08-2006, 11:09 AM

I'm proud to say that my state kicked the payday loan places out.

North Carolina Declares Victory In War On Payday Lending

One of the growing problems is that even though some states do ban these businesses from operating, many payday lender companies offer these loans over the Internet and/or by phone and fax.

poundwise · #20 (**permalink**) 11-08-2006, 11:14 AM

Quote:

Originally Posted by GrimJack

...if you borrow money to buy a car, you pay mostly principal and 'earned' interest; if you finance a car, you pay all the interest first then start paying for the car and you go quickly upside down and owe more than the car is worth.

While this most often true, as with a simple interest loan of any type, the primary reason a person ends up being 'upside down' most often has more to do with the value of the car and its depreciation rate than with the loan itself. This is, of course, especially true with a new vehicle.