What is Renting to Own?

Renting to own is a way for the working poor to get the necessities they need without paying substantial amounts of cash to get it.

Rent to own is a payment plan where you rent the furniture or appliances they need for a long period of time. If the person no longer wants the product, they can return it at any time. If you miss a payment, the item will be repossessed, but there will be no damage to your credit history.

Is it worth it?

With rent to own, the monthly payments are manageable and at the end of a stated time period, they may actually become the proud owner of that item. However, it may turn out that all those rental fees exceed the price of buying the item brand new.

Consider if you wanted to rent a microwave that retailed for $250 for $10 a month. Depending on your contract, you could own it after 90 payments, but that would provide the rental agency with a $750 profit.

Who does rent to own benefit?

Rent to own is a convenient service perfect for short-term living arrangements like college students living on campus.

If used properly, it can also be helpful for a short term rental, like renting a washer and dryer until yours comes back from the shop.

However for a long term ownership goal, it is more advisable to make do with what you have and try to save enough cash to buy the item in question as it can save you hundreds of dollars in the long run.

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GOBankingRates Staff

These articles are written by the in-house GOBankingRates team.

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What is Renting to Own?
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