For many of us, buying something out right, whether it is a car, TV or a sofa, is out of the question. Rent to own schemes offer you a way of buying things over time, which you otherwise wouldn’t be able to.
While this sounds like a great opportunity in theory, it can dangerous to your finances and needs to be carefully considered before agreeing to anything.
The main advantage of renting to own is that you get your product quickly, often the same day, for a low weekly or monthly payment. With the item being yours once the contract is paid in full.
This sounds ideal in an emergency when you might need an immediate fix, for example your washing machine breaks, your sofa is old and needs replacing, or your TV stops working. In these circumstances, you might not have time to shop around for the best price or option for you, but rushing into an agreement could leave you worse off in the future.
Reasons to be wary
The prospect of a rent to own is often too good to be true. This is because, in most cases, it is. The advantages will come at a steep cost, with items costing three to four times more the retail cost when all of the payments are totalled, making rent to own one of the most expensive methods of ownership.
While the rate appears more affordable than an up-front purchase or typical loan repayment, the rental period is much longer which means you will end up paying for more than a conventional loan.
Things to consider
Always read all the terms and conditions of the contract carefully. There will often be fees attached so it is important to know who will be responsible for repairs or maintenance and what happens if you are late or miss a payment.
If you decide that a rent to own is for you, make sure you do the maths before agreeing to anything. Many people enter into an agreement without fully understanding the financial commitment they’re entering! While something might seem important at the time, only rent an item you can’t live without. Agreeing to too many contracts at once with numerous payments can lead to you losing track and falling into further financial trouble.
It is also worth reading up on a company before becoming a paying customer. Check out what existing customers thought of their experience with the company through review sites. This will give you a truer image of the service you’ll be entering and may bring your attention to things you hadn’t thought of or been told about.
Shop around and consider alternatives
Though places like BrightHouse and PerfectHome make it easy for you to get a quick fix, there are alternatives for you to get what you need at a fraction of the price.
According to a recent investigation from the Mirror, families are paying up to three times as much for essential household appliances. They found rent-to-own companies charging £1,032 for a £349 tumble dryer and £2,850 for a £1,149 TV!
It is a good idea to shop around your high street and see what else is out there before you jump into an agreement with a rent-to-own company. There are many second hand and charity shops out there offering great deals for products which work just as well as a brand new one. Don’t get sucked in by the latest models and put yourselves in trouble!