Things I Don’t Understand Thursday-Rent to Own

Welcome to the 2nd installment of Things I Don’t Understand Thursday, the previous edition discussed the leaf blower.  Very similar to the leaf blower I do not rent anything with the intention to own it later.  One of my first thoughts about renting to own is that it exemplifies the “I want it NOW” society we currently live in.  If you want a new TV, head down to your local Rent-a-Center and get the 70 inch Large Screen TV, don’t worry we will charge you every week and in the end you will pay more than what the TV is valued at.  When you say it out loud it’s really just another way to borrow money to pay for something.

So apparently I have figured out I’m against financing an item, in any form or fashion that you cannot pay for right now.  I’m going to throw 0% interest loans as well.  I actually did this about 2 years ago, we went to a store called ABT, a family business whom I recommend and have bought all of my appliances from in the past years.  We found a TV we liked and decided it was what we “wanted”, Mrs. Even Steven found out that we could get the TV at 0% for 12 months* and signed up for the credit card/line of credit(I am an accessory to this crime).  Just like that we were going home with a new TV**, renting to own and the reason I say this is because if we didn’t make payments they would take it right back from us and if we didn’t pay the entire amount before the 12 months was up they would charge us interest on our purchase.

I don’t believe we should rent an item to own it later.  The only exception I can think of is a house and eventually with time this should be bought with cash as well.  I know this is a conservative man’s game, but I guess I’m a conservative man.  If I were faced with 2 choices and 2 choices only, 1) Borrow money with interest to pay for something or 2) Save up and pay cash for the item, I’m choosing option 2 in almost every single situation.  I do understand that it’s more difficult to live without debt and borrowing, especially with purchasing a house since it’s usually such a large amount of money, but if you start with no debt, saving money like the Frugalwoods at 65% or more is so much easier and that’s the point of this blog, getting back to Even Steven.

Advertisement tells us that if you have debt that’s normal, the next step is rent to own, the message is this is the next logical step.  That’s not how I see things, if I am making a purchase with a borrowed amount of money it means I should not be purchasing the item, I need to find another route or a cheaper option.  If I need to replace my vehicle, my thought process has changed.  It’s no longer look for the $40,000 new SUV, it’s deciding what I can fit into my cash budget and make sacrifices until I can do that.  Maybe it means borrowing a friends or family member’s car, maybe biking to work, car pool, public transportation, but it certainly does not mean go down to the local dealership and finance my new vehicle.  I’m renting to own and that no longer works for me.

So in the true sense of the words rent-to-own, my guess is that most readers are not stopping by the local Rent-A-Center, but I do think many of us are borrowing money to pay for something later.  I think we all can be better off, by delaying our purchase and paying cash.  I challenge you to try it next time you are looking to purchase something, I promise you it will have a different feel.  If you want to be even more radical, save up for the new purchase and pay for it in cash.  Buying a tile saw like Mr. 1500 Days, save up the $100 or $300 it costs, walk down to the branch or ATM to withdrawal the money and pay for the item in cash, you just might feel like you OWN the world.

 

*I paid her cash for my portion of the TV, she was responsible for the other half and yes we did pay it off in full, but so many things can go wrong along the way, why even risk it.

**We also negotiated a $50 discount, so don’t forget always make sure to ask for a discount.

Featured image courtesy of bankingsense.com

14 Responses to “Things I Don’t Understand Thursday-Rent to Own

  • Ugh – rent to own makes me cringe. Just the other day we saw a commercial for leasing some sort of car, and I was explaining to the kids that the “only” $299 a month was to BORROW the car. They were stunned that such a silly thing even existed. 🙂
    Laurie @thefrugalfarmer recently posted…We Truly Do Wish You a Very, Merry ChristmasMy Profile

    • EvenStevenMoney
      3 years ago

      That’s a great test, if you explain it to your children and they think it’s silly, probably not so good for your finances;)

      • Laurie,

        I like the idea of explaining it to your children and like what EvenStevenMoney said if they think it’s silly, their is a high possibility it is not good for your finances.

  • Rent to own is almost never a good situation. I’ll never understand people who get their laptops, TVs, furniture, and more through rent to own stores. You usually pay 10 times the normal price!
    Michelle recently posted…Happy Holidays!My Profile

    • EvenStevenMoney
      3 years ago

      It’s insane, I 100% don’t get it, having that mentality will just destroy any financial progress.

  • I find the commercials for rent to own stores to be truly offensive – and for the most part deceptive too. People jumping up and down screaming because the have been GIVEN credit to buy something they can’t afford otherwise?!? It’s just absurd. We don’t watch much TV, so don’t see them often. But while I was on maternity leave I caught a lot more during the day. Made mw mad every time. But it works. And that’s the sad part.
    Mrs. Maroon recently posted…Best Gift EverMy Profile

    • EvenStevenMoney
      3 years ago

      It’s true they are very deceptive, I went on one of the websites and the wording was tricky, they want you to believe that you are not paying any finance fees. Buy this $500 TV at no financing costs, just make $50 payments every week this year. We see this as a ripoff, but people hear $50 a week and think they can “afford” that.

  • I’ve never understood why someone would go the rent to own route. From what I’ve seen, the payments make the items so much more expensive.

    I have, however, taken advantage of 0% loans in the past. When my husband and I first moved in together, we only had a bed and a dresser. We took a 0% loan on a few pieces of furniture and paid it back before the interest accrued. I’m not sure if I’d take advantage of such an offer now that we’re in a better position though.

    • EvenStevenMoney
      3 years ago

      I think we are in the same boat with 0% financing, it leaves you open to risk and at this point why not pay with money you already have, agreed.

  • When I was younger I worked with a guy who had a real estate portfolio valued at roughly 8 million dollars built up over the years from providing rent to own properties. After hearing he only sold one property over the 30 years from an individual paying off the mortgage made me realize the only people who win in these situations are the providers of the rent to own opportunities.

    • EvenStevenMoney
      3 years ago

      Rent to own in real estate is like buying thousands of TV’s at a rent-a-center, like you said the renter isn’t coming out ahead.

  • I’ve never heard of rent to own stores, so I feel a bit out of the loop there. But I can make an argument for 0% interest loans, since you can divert the money you would have used and put it toward interest-earning investments instead. I think most people would actually come out ahead, but at the same time, I can understand why it would feel so much better to just be debt-free. Also, under your current mantra, then you would never use credit cards, and as someone who has saved thousands on vacations thanks to credit card rewards (always paying in full), I have to disagree with you there. There are great ways to use these tools to your advantage without going into debt.

    • EvenStevenMoney
      3 years ago

      My argument for not using 0% loans is that you pay cash, done no interest nothing to worry about. As far as credit cards, I’m treating it like they are a shot of Jameson and I’m going to AA meetings, just not willing to risk it for credit card rewards.

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