Often people go to rental companies to get furniture or appliances for their home. At the time, it seems like a good idea. Low weekly or monthly rates can be attractive for those on a limited income. In the end, you can lose more than you think.
Rental Companies are entities that cater to and in some cases, prey on the lower middle class and working class. High credit card debt or just not having enough money can make it hard for people in these brackets to afford to buy merchandise directly. By introducing new and desirable items, these companies can draw on a market of consumers who otherwise could not afford to own nicer items.
The companies charge what seem to be reasonable rates, until you add it up over the life of your contract. Most times you will pay double and sometimes triple the actual cost of an item. You may also be required to pay for their insurance. The insurance you pay for in case of theft or job loss can cost three to four extra dollars a week, but if you default due to either of these reason you will still have to turn over the item. In that case, why pay for the insurance that never comes into play?
Though if whatever you are renting needs repair, rental companies are very good about offering a replacement until your merchandise is repaired. Factoring this in can help you determine part of the higher cost. If you directly purchase an item, in some cases you may have to pay for repairs out of pocket. Still, if you directly buy something, you never have to worry about being a day or two late with a payment and facing the embarrassment of a rental company van coming to your home to pick up your things. That, plus the staff of the company calling any references you may have supplied at the signing of your contract in an attempt to ‘track you down’.
That being said, occasionally you may find good deals on something you really need. Some rental stores have cash and carry items you can purchase at a reasonable price. I personally found a lovely leather couch and loveseat for $300. I knew it had been previously rented. Having small children made a used item attractive, not wanting my kids to possibly ruin a brand new set.
There are other options to renting. If you already rent, you can return the item and save the payment you would have made each week until you have enough to buy what you want. Chances are, it will take you much less time to save the actual cost of a new item. If you really need the item you’re renting, then try to pay ahead. Pay several payments at once so if you need, you can let a few slide while you save.
One last bit of information I would like to pass on before concluding is this:
In some areas rental companies will tack on a ‘balloon payment’ at the end of your contract. In some states this is illegal and you do not have to pay it to own your merchandise. If this happens to you, refuse to pay and have proof that your state does not allow those types of extra payments.