Dangers of a rent to own

The dangers of rent to own

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.

Why?

The main advantage of renting to own is that you get your product quickly, 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. In these circumstances, you might not have time to shop around for the best price or option for you. 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 often costing three to four times more the retail cost. When all of the payments are totalled, this makes 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. This 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’s important to know who will be responsible for repairs or maintenance. There may also be late payment fees included if you miss a payment.

If you decide that a rent to own is for 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 much at once with numerous payments can lead to you losing track and falling into difficulties.

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 an image of the products and services offered by the company.

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 and see what else is available 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!

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