Renting to own furniture, electronics and appliances often seems like a good option to the cash-strapped. After all, when faced with the choice between laying out $600 on a new couch versus paying just $25 a week for one, the second option certainly seems more affordable.
That’s exactly why rent-to-own companies have structured their deals the way they have. They accentuate that seemingly affordable, weekly chunk rather than the total cost you’ll end up paying.
The Truth about Renting’s Cost
When you rent to own items, you’re generally paying more than the regular retail cost of that item. In essence, paying more for the convenience of weekly payments isn’t such a bad thing—but when you see how much more you’re paying, you may be surprised.
I searched online for a local rent-to-own furniture and appliance store and got a quote for a sofa and loveseat. The lease price quoted was $122.99 per month. That’s only about $30 a week. With the service fee, the monthly cost rose a bit, to $135.28. But here’s where it gets really scary. After paying for the furniture for 24 months, a buyer would own it in full—at a total cost of $3,246.72. Yet there were comparable sets at other local retailers for just $1,200 outright.
Alternatives to Renting
Renting can be a good solution for someone who just needs a temporary appliance or piece of furniture, but for everyone else, there are better ways:
• Be patient and save. You can take the money you’d be spending on your rental piece and instead save it for a few months and buy something outright. In the example above, after roughly five months you’d have enough set aside to buy part of the living room set.
• Shop clearance. When furniture stores have slightly damaged or returned goods, they often sell them as clearance for much cheaper.
• Ask friends and family for their unwanted furniture. It may not be your ideal setup, but it’s something to get you started while you save for the set you really want.
Take the time to fully research all buying, renting or leasing decisions and you’ll save way more money than you might expect.