It’s amazing what we can convince ourselves we “need.” When in truth we need to look after our families, sleep indoors, eat nutritious meals and drink clean water, we convince ourselves we need a cell phone, a gym membership — and new furniture. We work hard, and certainly in theory we do deserve to have the things we want, not just the things we need. When the springs start to poke through the couch cushions and the mattress has more lumps than grandma’s gravy, we convince ourselves we need new furniture, even when we can’t afford it. At least furniture, unlike a vacation, is around for a while, but except for your house and your car, you should start working towards habits that let you pay cash for everything else. If you can’t quite bring yourself to do that, at least be very careful not to fall into the rent-to-own furniture trap. The allure of rent-to-own retailers is that you can make small monthly payments — smaller than you would pay if you financed the furniture through your bank. The downside is that payment often stretches over so long a length of time and at such a high interest rate, by the time you actually own the furniture you could have paid off a bank loan twice. In addition to interest rates that are substantially higher than the going bank rate, there is always a lot of fine print. If you decide to return the item early, you’re out whatever you’ve already paid on it. Of course, if you miss a payment, the company will repossess it, and quick. They don’t report timely payments to credit bureaus, but they don’t report missed payments either, because technically it’s not a loan. Rent-to-own prices are much higher than other retailers, often shockingly so. We did a quick check on one rent-to-own website and found a 32” Toshiba LED TV for $10 x 156 months, or $1,560. We found the same TV at an electronics retailer for $275. A certain Acer laptop was $549.99 at the electronics store; it was $1,976 ($19/week for 104 weeks) on the rent-to-own site. If that’s not enough, rent-to-own retailers are often under fire for complaints to the Better Business Bureau and consumer advocate groups. The bottom line is that these companies exist to serve
customers with poor or no credit who can’t get traditional financing. With today’s rampaging consumer debts, rent-to-own furniture, electronics and appliances retailers are more popular than ever, but they’re seldom a good idea.