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The Truth Examines Despicable Lending Practices – Part 5 –
Rent to Own Furniture and Appliance Stores
By Fletcher Word
Sojourner’s Truth Editor
Need a TV? Need a TV in a
hurry?
You’ve got options these
days. In a just a few minutes you can be at one of several
Walmarts in the area and pick up a 24” Samsung for only
$127.99.
Or is a 24 inch screen too
small? What you really want – not need, but want – is a big
screen TV. OK, keep looking around in Walmart and you can
get a 55” Phillips 4K Ultra HD Smart LED TV for a very
reasonable $448.00.
You don’t have $448? No
problem. Just get the smaller one now, for such a low price.
Sit a little closer to the screen for a few months until you
have the $448 and can splurge on the bigger one. Pass the
smaller one along to a friend or a relative for about $50.
No good, eh? Gotta have
that big screen immediately and your credit isn’t so good?
There are certainly a lot of alternatives in the area – rent
to own furniture and appliance stores where you can get that
big screen immediately.
For example, you can walk
into one of about a dozen Rent-A-Centers in the area and
find that same big screen Phillips – the very same model –
and you can walk out of the store today with it – bad credit
or no credit, notwithstanding. And for only$28.99 per week.
And you don’t have to squint at a tiny 24” screen.
The good news is that
after only 72 weeks, you will own your big screen. The bad
news, the very bad news, is that you will have paid a total
of $2,261.22 over that time or more than five times what it
would have cost you at Walmart.
Who would make such a
deal? There are 15 Rent-A-Centers and a half dozen Aaron’s
Lease to Own shops in the area – to name the big companies –
so somebody out there is making such deals. In fact millions
of people around the nation are availing themselves of these
deals annually.
The Truth has thus far
examined payday lenders, housing scams and auto predators,
all of which can wreak havoc in a person or family’s life.
Rent to own businesses are not quite on that level simply
because of the difference between want and need.
There are times when one
needs some extra money, when one needs a place
to live or when one needs to buy a car to get to
work.
One hardly ever needs a
certain bedroom set or living room suite. And, truth be
told, one may want but never, ever needs a 55” Phillips 4K
Ultra HD Smart LED TV. However, all that wanting and
satisfying those wants in such financially harmful ways such
as renting unnecessary items from a rent to own shop
eventually creates needs – such as the need for a loan from
a payday lender to keep afloat an unsustainable lifestyle.
Bill (not his real name)
is all too familiar with the process. Bill worked at an
Aaron’s Lease to Own for several years while he was
attending college. Part of Bill’s duties during that time
involved collecting money from clients – and collecting the
furniture and appliances when they wouldn’t or couldn’t pay
the weekly or monthly rental fee.
Bill observed his store
management make hundreds, if not thousands, of arrangements
with people who obviously could not afford such luxury
items. The store would lease a television set, for example,
and as it happened so often, within a couple of months the
client would find that the $110 to $120 monthly price tag
was a lot more difficult to make than he had anticipated.
The store’s truck would be
sent to the residence to pick up the television which would
be sent out the next day to a new client’s home. The store
would keep the same merchandise moving in and out of
residences, says Bill, collecting a few months’ payments
here and there.
It was ultimately to the
store’s benefit, says Bill, that people couldn’t keep up
with their payments because the store was often able to keep
collecting rental fees on the merchandise without ever
giving it up.
Our local Rent-A-Centers
know their clientele. In their promotional piece for the 55”
Phillips, they list the cash price as $1,299 – a bold move
considering that’s almost three times the price that the
competition charges. Clearly they know that virtually no one
wanders into their stores to pay cash for any item, but
attaching such a price tag to the Phillips makes the 78
weekly payment total seem less outrageous.
Charles (not his real
name) knows all about the pitfalls of impulse buying … or
renting as the case may be. After a divorce, Charles found
himself starting all over again, in an apartment with just a
few pieces of furniture borrowed from friends. He felt he
needed to fill up the living room immediately, so he went to
a Rent-A-Center and quickly obtained a big screen TV and a
set of living room furniture. Charles held onto the items
for four months before he realized that there was no way he
could keep up the payments much longer into the future.
After having paid about
$250 for four months of big screen football games and lots
of sleepless nights, Charles had the merchandise returned
before he wasted more money. A year of sitting in his living
room in a chair watching a 24” screen finally paid off when
he was able to started paying cash for room furniture. He
was pretty used to the 24” screen by then.
Lisa (not her real name)
was not quite so lucky. Lisa graduated from college 10 years
ago and immediately got a good-paying job in the medical
field. She was, in her own words, “smart, competent,
hard-working and totally ignorant about how to manage my
finances.”
Having no credit and
wanting immediate gratification, Lisa found her way to a
rent-to-own store and got enough furniture to fill her one
bedroom apartment. That moment of insanity led to others
such as a loan from an auto dealership at an outrageous
interest rate. Within a few years, Lisa was deep in debt and
her no-credit status had deteriorated into a bad-credit
situation. She is now working with a financial counselor to
correct that situation.
Unlike the predators we
have examined previously – the payday lenders, the mortgage
lenders, the auto dealers – rent-to-own stores won’t, by
themselves, destroy an individual’s financial situation.
Fall behind in the payments and the store will simply grab
their merchandise – there’s no contractual obligation to
continue paying them once that occurs.
However, as with those
other lenders, rent-to-own operations prey on large number
of persons, particular those of low-to-moderate incomes, and
make their lives immeasurably worse while raking in enormous
profits that do not stay in the communities they that they
harm.
Meanwhile, if you are
looking for a Sony Home Audio System with Bluetooth,
Rent-A-Center has a deal for you! For only $24.99 per week
you can take it home right now. If you complete the 52
weekly payments – a total of $1,299 – you will own it. Or,
you can select the 90 days same-as-cash option and pay a
mere $779 for the system.
Of course, you can also go
to Walmart and pay $248 and save yourself a bundle. Just
depends on how much you need a Sony Home Audio System
with Bluetooth. |
