A CANDID LOOK AT LEASE-TO-OWN FINANCING
The most important thing to understand is…
it’s unrealistic to compare a Cash Price with a Financed Price.
Lease-to-own financing allows consumers to get merchandise quickly, often the same day that they apply . For those with a poor credit history, it can be a useful tool. But like any tool, it should be used with care. Tires can be an expensive purchase, so financing can be a good option for consumers who cannot comfortably afford to pay for new tires in one payment.
But there are some important things to know about the process:
- Unlike with Acima Credit, when a 90 day same as cash option is selected, the lease fees for the first 90 days are normally added to the total cost if the 90 day deadline is not met. (Important to remember!)
- There have been complaints that lenders do not adequately explain their contracts, and provide less than desirable customer service. Customers rent products without understanding the contract, thereby burdening themselves with payments they cannot manage.
- Although a lease-to-own contract is not a loan and does not involve payment of interest rates, when factored in, the equivalent lease rates can be 60 to 100 per cent or higher.
- The higher the number of payments, the total cost will be more than retail, sometimes double or triple the item’s original price.
- Additional fees may also be charged for late payments, delivery, or insurance.
When considering a lease-to-own purchase, it is very important to follow these tips to ensure that this flexible payment option does not become a costly nightmare:
- Read all terms and conditions of the contract carefully before signing,
- Determine what fees are associated with the transaction,
- Who is responsible for repairs or maintenance,
- What happens after a late or missed payment,
- Make sure you get in writing, the total dollar amount and number of rental payments you'll make to acquire ownership,
- Look for reviews...what other consumers’ experience has been like.
- Visit the Association of Progressive Rental Organizations’ website, rtohq.org, for links to state laws.