Advertiser Disclosure
Advertiser Disclosure: The credit card and banking offers that appear on this site are from credit card companies and banks from which receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. does not include all banks, credit card companies or all available credit card offers, although best efforts are made to include a comprehensive list of offers regardless of compensation. Advertiser partners include American Express, Chase, U.S. Bank, and Barclaycard, among others.

Beware of the Real Cost of Rent-to-Own Stores for Furniture, Appliances & Electronics


Additional Resources

A few weeks ago, I sat in the parking lot at a local plaza watching people file in and out of one of those rent-to-own stores.

Without naming names, let’s just say that this particular store is a big one with locations throughout the country. I was astounded by how much business this place was getting.

It’s no secret that buyers end up paying far more than the sticker price at these stores. But are patrons even aware of this, and do they even care? What is it that keeps rent-to-own stores in business?

What Is a Rent-to-Own Store?

In a rent-to-own transaction, customers rent an item – typically a major household appliance or piece of furniture – for a monthly cost that’s usually much lower than a monthly loan payment would be. The rate is attractive because it seems more affordable than an up-front purchase or typical payment plan. After completing payment in full over the term of the rental, the customer owns the item. But that rental period is a much longer one, and after calculating the total expense, the buyer ends up paying far more than a conventional loan would have demanded.

Motley Fool Stock Advisor recommendations have an average return of 618%. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. 30 day money-back guarantee. Sign Up Now

Are Rent-to-Own Stores a Scam?

Depending on who you ask, a rent-to-own store could be a good place to get some furniture or electronics as a short-term purchase. Or it could be one of the biggest scams around. The most telling aspect of the way these stores do business is the pricing. In most of these establishments, prices are not marked. This usually makes shopping rather difficult. Fortunately, there are usually well-trained associates ready to help you find out prices and lease terms. (Please note the sarcasm.)

“Scam” is a pretty harsh term, but depending on how you define the word, you may just feel that it applies here.

Reason 1: These stores frequently come under fire with entities such as the Better Business Bureau and other consumer protection organizations for allegedly using deceptive sales practices, or failure to disclose interest rates. Advocacy groups that have attacked rent-to-own business have successfully won legal battles to change laws in Minnesota, New Jersey, and Wisconsin.

Reason 2: These stores are often less than forthcoming with their prices, but they are legally required to do so. In other words, if you ask, they have to tell you.

Reason 3: Interest rates of 100% and higher are often in effect when choosing the rent-to-own option. Legally speaking, there is nothing wrong with this, as the rent-to-own option is technically not a loan, but a “lease,” and the product can usually be returned at any time during the lease period. (Fees usually apply.)

In a stroke of luck, while writing this, I got a flier in the mail from the same store that I was recently watching. This particular company doesn’t seem to have a problem disclosing their “buy now” price, along with the rent-to-own price. I guess they figure that either their customers do not care about grossly overpaying for their products, or they are not smart enough to do the math and realize how much they will actually pay. We smart shoppers (yes, you are included in that “we”), are smart enough. Would you like to see some of these advertised “deals”?

40″ LCD TV

  • Buy it Now Price: $1,199.99
  • Rent-to-Own Price: $1,919.76
  • Interest Rate: 60%
  • Lowest Price Found for Same Product (new): $499.00

23 Cu. Ft. Refrigerator

  • Buy it Now Price: $1,499.99
  • Rent-to-Own Price: $2,399.76
  • Interest Rate: 60%
  • Lowest Price Found for Same Product (new): $699.00

XBox 360 Halo Bundle

  • Buy it Now Price: $629.99
  • Rent-to-Own Price: $839.88
  • Interest Rate: 33%
  • Lowest Price Found for Same Product (new): $399.00

The Fight Against Rent-to-Own

Many consumer advocate organizations have put together campaigns to combat the often deceptive and misleading practices used by rent-to-own stores. And they don’t stop at mere meetings or a few angry letters. Many of these campaigns seek stricter state legislation on these stores, citing predatory lending practices, failure to properly disclose rates, hidden fees, and many other deceptive methods of operation. Some states are much more lax about regulation than others, so know your local laws before you decide to “fight the good fight.”

How to Save Yourself From Paying Too Much

If you decide (for whatever reason) that rent to own is for you, do yourself a favor and crunch the numbers before you agree to any terms. Far too many consumers do not fully understand the financial commitment that they’ll be on the hook for, and it’s too easy to end up holding the bag. I would hate to see anyone paying $800 for a $250 plasma or LCD television set, especially when I think about how long of a commitment a two-year lease really is.

For all you know, your leased item could be obsolete by the time you pay it off! If the deal seems on the up and up, look for language in the lease that leaves you liable for things such as damage, theft from home burglary, returns, or any other variable that could come up. The lease is likely costing you plenty, so don’t read the fine print so fees don’t sneak up on you as well.

Final Word

Simply calling rent-to-own a scam may seem extreme, but it’s close enough to make you think twice before committing. Every business is out to make a profit, but there’s a limit on how much of a burden the customer should bear. I will not soon be patronizing a rent-to-own store. What about you?

I’m also curious to know whether any you have had any experiences with rent to own stores (positive or negative). Maybe your outlook is completely different than my own. If there is anything you feel you can add here, please do not hesitate to share. And don’t forget, do the math!


Sign up for a CIT Bank Savings Connect account and earn 1.20% APY. No monthly service fees.

Stay financially healthy with our weekly newsletter

You are looking at Matthew Breed. He is a 30 year old sports nerd who lives in North Florida with his fiancee, Sarah. Originally in school for a Business degree that did not work out due to capricious youth and irresponsibility, he is currently "getting past" his Peter Pan syndrome and attends classes for a degree in Information Technology while working full time. His care for personal finance stems from a modest upbringing with fiscally responsible parents who highly value education and frown upon frivolity.