Pros And Cons Of Rent-To-Own: Everything You Need To Know
The Concept of Rent-to-Own Rent-to-own too alluded to as rental buy may be a strategy of buying merchandise such as furniture, customer gadgets, or family machines on lease with the alternative to buy. In this strategy, the buyer pays an indicated sum of lease in installments, as a rule over 12-24 months, now and then comprehensive of a token sum of cash to pay for the products. When the concurred rental period is due, the tenant can either make a full buy of the thing or return it, or renew the rental period until he needs to form a buy or return it.
Rent-to-own stores are exceptionally prevalent for those who require merchandise presently but cannot go through the forms of credit checks or meet the prerequisites of financing. It empowers the customers to utilize and test the stock by paying a lower amount intermittently instead of acquiring the item. In any case, pundits say that the whole costs are as a rule higher than the conventional installment structure. Presently, let us talk about the major points of interest and drawbacks of rent-to-own contracts.
Pros of Rent-To-Own
Instant Product Availability with Minimal Initial Costs
Usually, the initial rental payment is a tiny down payment, therefore- rent-to-own lets you take the item right away home. Above all, there is no need to wait for permission for funding to be executed. Rent-to-own offers a way for one to get furniture, electrical appliances, and other devices under reasonable payments when one does not qualify for other payment options.
Flexible Terms
You are not tied to long-term contracts. The great thing about most rent-to-own contracts is that you can take the merchandise back at any time without any repercussions. Another option is to decide on a certain percentage of the payment and then stop renting and purchase the item. These flexible payment plans enable you to make a halt in your payments in case of any financial challenges.
Sampling Before Purchase
The rent-to-own arrangement allows you to use the products in your home before deciding whether to own them or not. If you find that it is not the right item, model, or style for you, you can exchange or return it without any hesitation. This ensures that you only take what will meet your expectations.
No Long-Term Debt Obligation
Unlike conventional methods of paying for furniture where you are required to make a big down payment and then make monthly installments, rent-to-own enables you to pay for furniture in small amounts that are payable periodically. Failing to make the stipulated payments allows you to return the item instead of straining your credit. Where interest equivalents exist, rent-to-own does not leave you with an expensive item that you cannot pay for at the end of the rental period.
Cons of Rent-To-Own
Costs More Than a Cash Transaction
The major disadvantage of rent-to-own is the fact that the overall cost is significantly higher than in the case of direct purchase. The stores take monthly fees to be charged in the form of very high interest rates which, in some cases, total over one hundred percent on an annual basis. With as much as half the payment going to interest, the total amount paid for a product ends up being double the price of the product.
Potential for High Fees
However, rent-to-own transactions have high costs beyond the form of pricing through which the agreements are concealed with additional charges. Some of the fees that the company charges include the application fee, processing fees, late charges, pickup fees, and delivery fees. Secured debts can be reclaimed within a short period for one overdue or missed payment, and the chances of losing the equity that has been accumulated are high. Avoid being blinded by fancy offers by reading all the small print to discover the real deal.
Used and Refurbished Products
Do not go to rent-to-own stores expecting to see the latest models and high-grade equipment at your disposal. Inventory is usually of second-hand and recycled products. At times they can be quite close to new and cost less than new, however, reliability and durability are doubtful. One should be careful and scrutinize the items in question before entering into contracts.
Pay on Delivery: A New Concept in Ownership
What this means is that if you are in a rent-to-own agreement, the product is legally owned by the dealer until you complete your payments. It also means no building of equity, selling, or even repairing until the transfer of ownership is assumed. And if you don’t get the ownership, then you are charged more than the cost of the item in rental fees alone.
Making the Best Decision Rent-to-own satisfies consumers who cannot obtain the credit required to purchase basic household needs. It enables you to acquire the products, and then gradually progress towards possession. As you will learn in this article, the costs are even higher, making it impossible for most consumers to purchase the products. It is therefore advisable to compare between regular retail stores and rent-to-own stores to make the best decision in your circumstances. Determine the total cost for the two choices with all charges factored in. Check how realistic it is in terms of the real costs and how long the person can continue making payments.
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