Financial scams and rent to own problems

Instead of saving money to purchase products, many young people elect instead to take what appears to be the quick way out - getting their furniture or TV from a retail establishment that advertises a "rent to own" option. But that rent to own television can turn out to be very costly, indeed. The building of good credit takes a while, and young adults living on their own often find it hard to obtain basic household necessities without established credit. It is expensive to purchase a stereo or a room full of furnishings, and saving cash to do so might take a long time, perhaps years. In many cases, rent to own is just another financial scam.

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With rent to own, the buyer pays on a weekly basis for a set amount of time - typically 18 months to two years. The average store will have a variety of home furniture and appliances, such as microwave ovens or washers and dryers. The customer can pick out the stereo or electronics that he or she needs, sign the contract and soon have that apartment full of furniture. At the end of the rental term, the buyer gets to keep the merchandise.

Is renting to own really any different from a credit card purchase over time? The idea of renting to own may sound appealing to many people. 
 

The cost of renting to own can be deceiving; by the time you have concluded the contract, some 18 months later, you will find that you have actually paid $750 for a $250 television. The long amount of time required to "own" the furniture means that the store will get far more cash over the period of the contract than the purchase is worth. The rental cost may seem acceptable, when only considering the weekly price. If you have rented $1000 worth of furnishings, you may realize that you've forked out three thousand dollars for it by the time you actually own it.

If you fail to make a payment, the merchandise may be taken back by the rental company, leaving you with nothing for your cash. It's easy to observe that renting is no bargain when you think about all of the financial aspects of the rental process. You may find that the rental company has reported your lack of payment to the three credit agencies, which could lower your FICO, or credit score and make it even tougher to buy furniture or household items in the future.

There are times when it may make a lot of sense to employ a rent to own company. Make sure that the rental company is willing to report your prompt payment to the credit reporting agencies. You want to make sure that renting helps you build a credit score so that you will have an easier time buying down the road. You ought to do some comparison shopping so that you understand exactly how much you are paying in comparison to the amount you would pay if you bought the products outright. Before signing up, make sure that you read it carefully and understand all of the terms.