Every day, I meet with people to discuss their finances. One common subject is classifying the type of debts that they have. Rent-to-own contracts have become all too common in today’s financial market. Many people are unable to acquire standard financing so they turn to alternate methods to acquire property. While it may seem like a deal at the time, it usually ends up costing more in the long run.
Rent to Own Costs You More
Even though traditional retail installment contracts can have excessively high finance charges, they rarely compare to the markup of rent-to-own contracts. In a recent Washington Post article, an example is given where a $1,500.00 sofa ends up costing $4,150.00 in a rent-to-own agreement. It is also noted that around 75 percent of rent-to-own agreements are either returned or repossessed.
While the overall terms of the agreement may seem obviously predatory, the low payments continually lure individuals into the contracts. Rent-to-own retailers have increased exponentially since the financial crisis of 2008. With the decreased income of the working class, fewer people are approved for traditional finance agreements. Rent-to-own companies have taken advantage of this market and profited greatly, much to the detriment of the everyday American.
Recently, officials in Vermont called for legislation requiring tighter regulation on rent-to-own companies. They labeled it “upside-down capitalism” because the agreements charge the poorest citizens the highest prices. While the companies behind the agreements praise the benefits of the contracts, the high mark up clearly negates any short term advantage.
If you find yourself locked to a financial obligation that you can no longer pay, regardless of the type, we can help. Call our office nearest you to set up a confidential consultation with one of our experienced attorneys.
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