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Spending - Head Matters


2. Means of Purchasing

c. Rent-to-own

You may have seen - or even used - these stores. They advertise with a sign that says “Flat screen TV only $29.95” in great big letters.  However, below in much smaller letters, it says “per week for 200 weeks.” The way it works is that you pay the store to rent the item until you have paid them so much that you have fulfilled your rental agreement, at which time you’ve bought the item – often you’ll end up paying as much as twice what the item is worth. Often the items have been rented out to others before you rent them, so they’re not even new. If at any time during the rental period you can’t make your payments, they can take the item back. Remember, until you fulfill your agreement, you’re just renting the item from them and don’t really own it. 

This chart describes some of the advantages and disagvantages of the different means of purchasing.

   Advantages  Disadvantages
  • Lowest cost option
  • No interest paid
  • Sometimes you have to wait to buy the item
Borrowing to buy
  •  You get the item right away, or as soon as the loan is approved
  • Usually pay interest, which means the item costs more
  • Must make on-going payments
  • You get the item right away
  • You can bring the item back and get a new one when the term is over
  • At the end of your lease term you do not own the item and will likely have to pay extra for wear and tear 
 Rent to own
  • You get the item right away 
  • You may pay as much as twice what the item is worth
  • If you miss a payment or can't continue to pay, the store will take your items back
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