Last month I talked about cash advance stores and how you should avoid them. This month I’m going to talk about another type of business to avoid – Rent to Own places. Just like with cash advance places, they barely existed 25 years ago. But now you see them everywhere. And just like with cash advance places, you only see them in not so great neighborhoods. Never in nice ones, because people in nicer neighborhoods would never do business with them. That’s why they can afford to live in nice neighborhoods. Because they weren’t silly enough to pay (in some cases) 1000% interest on an appliance.
Let me explain. Rent to Own places thrive on people who can’t do math. They also cater to people who think only about small weekly or monthly payments instead of thinking long term. They will gladly rent you a new TV for $25 a week for 36 months. Sounds like a good and affordable deal. But that adds up to $1,950 over those 36 months. This for the same TV you could have bought in a store for about half that. And, of course, these places advertise that they will rent you anything with “no credit check.” How nice of them. They know that the type of customers they are looking for have terrible credit. If they actually only rented things to people with good credit, they would soon be out of business.
There is only one occasion when you should even consider setting your foot in one of these places and that’s when you’re looking to buy an appliance for a good price. Many times they will give you a really good deal on a used item, especially when you are paying cash (which, of course, you are). Just like you should never buy a used car and instead let someone else pay the depreciation, you should look to get a good deal on an appliance that someone else was silly enough to rent for a while.