For those with little or no credit, purchasing furniture and appliances can be a daunting task. Such items are considered necessities, but can carry large price tags. Securing financing can also be difficult as many credit providers have increased restrictions on providing loans.As a result, consumers may turn to rent-to-own stores that offer big-ticket items for low weekly or monthly payments with no credit check. For many, the convenience of low regular payments is worth the inflated price. However, Better Business Bureau advises consumers read and understand rent-to-own contracts completely before signing, and recommends consumers consider how such a purchase will affect their credit.
So far this year, BBB has processed over 600 complaints regarding rent-to-own companies, alleging problems with customer service, collections, quality of the merchandise and more.
Big mark ups are common for rent-to-own companies, and many advertise payment amounts without publicizing the full payoff amount. Several of the most recognizable companies list products on their websites, television, print and radio commercials, but not prices. Consumers should make sure they can afford the regular payments before agreeing to a contract.
BBB advises to avoid becoming overwhelmed with debt, as it can be extremely difficult to repay. However, if you are in the market for new furniture and appliances, but are unable to secure financing, BBB offers the following advice:
Shop around. The prices at many rent-to-own establishments can be high even when consumers buy their products outright. Check the prices at other stores before committing.
Inspect the merchandise. Examine each item closely before making a purchase. Some consumers have complained to BBB about the poor quality of their goods.
Avoid finance charges. When possible, pay in full at the time of purchase or shop around for zero percent interest, same-as-cash offers. If you must pay over time, multiply the number of payments by the payment amount to calculate your total cost, then decide if you think the item is worth that price.
Use a credit card. Interest rates on credit cards might be lower than paying via a rent-to-own contract. Paying with a credit card also allows you to dispute the charges if needed.
Look into layaway. Many major retailers are offering layaway programs that allow consumers to pay off a purchase in small payments, without the mark-up of rent-to-own stores or the interest that comes with credit. Such programs may be a great option for those with poor credit.
Consider buying used. Second-hand shops and garage sales can have quality merchandise for deeply discounted rates. Check classifieds in print and online for individuals selling items they no longer use. Some may even be looking for someone to take items off their hands for free. Keep in mind, however, that purchasing via these methods may provide no protection for you should you be unhappy with the product once you take it home.
For more tips on how to be a savvy consumer, go to www.bbb.org. To report a fraud or scam, call the BBB Hotline: (903) 581-8373.