3 On Your Side: Rent-To-Own Warning
PHILADELPHIA (CBS) - How would you like to take home a big screen TV or a shiny new laptop for just a few dollars per month? That can happen if you rent-to-own. But 3-On Your Side Consumer Reporter Jim Donovan has some advice before you sign any deal.
In the wake of the credit crunch that left many unable to get a loan for big-ticket purchases, millions of consumers have decided to rent-to-own.
The agreements typically don't require credit checks and if you miss a payment you can return the item and walk away without penalty and without putting a ding in your credit score. If you make all of the payments, the item is yours.
But a new Consumer Report study finds some rent-to-own agreements with extremely high interest rates attached. Some consumers could be paying 200, sometimes 300 percent interest by the time the deal is said and done, if they don't do the math ahead of time.
Mandy Walker of Consumer Reports says, "You want to sit down with a pencil and paper and really figure out what you're paying. Do some research, look online, look what the lowest price is."
Watch the video...
If it's a big screen TV or a brand new computer that you're after Consumer Reports advises waiting until you can buy it outright. Walker says, "Put the money away in a saving account or a money market account, that way you might be earning a little interest, the same amount that you would be paying for the rent-to-own plan."
By some estimates, less than 25 percent of consumers actually rent products long enough to actually own them. The 3-On Your Side often hears complaints that companies failed to disclose all the costs and terms of rent-to-own agreements. So we advise you to read everything twice before signing any paperwork.
Reported by Jim Donovan, CBS 3
