The title of the article caught my eye Why Would Anyone Rent to Own? My quick witted smart ass answer was “So poor people can stay poor and impoverished, and because we now live in an instant society where individuals can’t seem to wait for anything”. As an external observer, I am also aware and in agreement that it is not just the low-income people who fall into this trap. Higher-income people do as well, but only with a credit card. They put their inadvisable purchases on plastic at much lower effective interest rates. Someone who charges a $450 television on a card with a 20 percent interest rate will pay $89.49 interest over 22 months, if they make minimum payments. To buy the same TV, a rent-to-own customer might make 52 weekly payments of $20 and spend $1,040 — $590 more than the cash price. Reading the sentence “People who use rent-to-own stores often end up paying twice the retail price — or more — for anything they buy.” left me thinking “No shit!”. I continue to read “Rent-to-own companies typically offer free delivery, setup, and service if items need repairs, a huge plus, because many families don’t have savings to pay for unexpected expenses. (The Federal Reserve says 44 percent of U.S. adults couldn’t come up with $400 in an emergency.)”
That number scares me as the break down is $33 a month or $16.50 per paycheck, and most individuals should be able to save that in a month. That number is why I teach financial responsibility to my youth and young adults. I remind them to always pay themselves first by the way of direct deposit. Weston mentions in the article “Low-income people often fear any money they save will disappear into other spending when their incomes drop, or get eaten up by bank fees, or disqualify them from some public benefits, while payments required by a rent-to-own contract allow them to purchase goods they couldn’t otherwise get.” It is my hope that social workers and other agencies will help educate the underprivileged through looking for low-fee bank accounts and learning about asset limits for benefit programs like TANF and SNAP, since those may be higher than people think. The idea should be to make it easier to create savings, so they need these products less.