Rent to Own
Rent-to-own
stores allow consumers to rent or buy major household items over time with
small monthly, weekly or biweekly payments, often as little as $10 to $20. The
rental contracts typically run from one to two years, usually with the
intention that the consumer will own the product at the end of that period if
they make all the payments. But unlike a traditional layaway or similar plans, the
customer gets use of the item right away. There's no credit check, and
consumers can terminate the rental at any time, with no further obligation. The
stores will deliver, install or pick up the merchandise, and also provide
maintenance and repair. That has made them affordable and attractive to
low-income consumers and those who can't qualify for credit cards or
traditional payment plans. Many of the customers have little choice for
necessities like a refrigerator or bed, because they can't afford to buy them
outright.
Access to these items comes at a high price, however. Current New York State
law allows rent-to-own businesses to charge up to 480% of the business’ own
cost for these goods. It is often true that if a consumer misses even one payment,
the contract is voided, all payments toward ownership are forfeited, and the
item is reclaimed by the store. All rent-to-own transactions in New York State
are effectively insulated from consumer lawsuits, so it is very hard for a
consumer who has been harmed by a rent-to-own transaction to get a fair
hearing. (Source: Buffalo News, 8/9/2010)
ARTICLES
Best Buy May Offer Rent-to-Own Option (The Wall Street Journal - Market Watch)
The New Rent to Own Law: History Repeats as Both Tragedy and Farce
IN THE NEWS Best Buy Ceases Rent-To-Own Program With Rent-A-Center
Rent-A-Center CEO: New Consumer Bureau Won't Have Authority Over Us
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NEWSLETTERS Legal Services Journal - Spring 2011
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