Why Retail Buy-Out Isn’t Worth It
If you are short on money and need a refrigerator or furniture, you may be tempted to rent out. These are home appliance and furniture stores that allow shoppers to pay for items over time by giving away a monthly amount. But Consumer Reports shows why this is a pretty awful idea.
They reveal it in the video above, but their money editor Mandy Walker explains it quite simply:
If these were loans, the equivalent interest rate would be between 50% and 150%. There is a lot of small print in advertisements and contracts, and many consumers simply don’t realize the full cost.
Consumer Reports mentions Aaron’s and Rent-A-Center, the two largest pay-to-rent stores. With a typical plan, you can make monthly payments for two years before purchasing the device at the listed cash price. They found that some of these plans end up costing consumers hundreds of dollars more than simply paying for the item directly.
This is a classic debt trap that they detail in the linked article below.
What You Should Know About Rent-to-Buy Retail Models: Additional Costs, High Interest Rates | Consumer reports