Buying Furniture on Lease/Rent-to-Own – Know the Cost
For people with poor credit who feel the need to buy furniture – but do not want to save for their purchase – there are a number of lease/rent-to-own furniture stores in the Toronto area that are willing to do business. Normally, they do not require credit checks or down payments, although they usually want some proof of income.
If you agree to enter into a lease/rent-to-own agreement with them – they will take great pains to explain to you how much you will be paying over the length of the agreement. Unfortunately, even these careful explanations of how much it is going to cost – do not deter many people.
In an effort to show how much more these eager buyers are paying by using comparisons.
We did a small, online investigation:
We found a sofa/love seat combination available at a Toronto lease/rent-to-own store for weekly payments of $15 for 156 weeks (3 years) which works out to $2340 + Taxes.
Doing a quick check online we found the same sofa/love seat combination available online in Ontario locations for a purchase price of $1079 + Taxes.
Both of these companies offer free shipping, warrantees and guarantees.
Lease/Rent-to-own Sofa/Love Seat $2340 + 304.20 (Taxes) = $2644.20
Online Purchase Sofa/Love Seat $1079 + 140.27 (Taxes) = $1219.27
So – how much extra would our lease/rent-to-own customer pay in this case?
an Extra $1,424.93 for the same sofa/love seat combination!
They would be paying:
132% interest over 3 years
44% interest per year
Another thing to consider – in our search we found one of the lease/rent-to-own companies selling what they claim to be a new, exact same sofa/love seat combination for $899.00 + 116.78 (Tax) = $1015.78 – in an online classified ad.
How much extra would our lease/rent-to-own customer pay in this case?
an Extra $1628.42 for the same sofa/love seat combination!
They would be paying:
181% interest over 3 years
60% interest per year
And if all of that is not enough – until that last 156th payment is made – the lease/rent-to-own company still owns the sofa and love seat.
So before you sign on the dotted line – please, think about it.