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Buying something through Aarons or other rent to own companies?

Home ▸ Archive ▸ Serious Business ▸ Buying something through Aarons or other rent to own companies?
KR1245's avatar

KR1245

Senior Member

4,317 posts
Jul 21, 2010 1:05 PM
Has anybody done this? Was it a good experience? My girlfriends sister has decided to buy a TV from a rent-to-own company. She asked my opinion but I dont really know much about them. I guess it seems like a good idea for people that are looking for alternative methods to make a purchase. So......anybody make a purchase this way?
Jul 21, 2010 1:05pm
justincredible's avatar

justincredible

Nick Mangold

32,056 posts
Jul 21, 2010 1:11 PM
It is the absolute worst way to make a purchase, at least IMO.

In the end you pay WAY more than what the item would cost if you just saved up for it and bought it when you could afford it.
Jul 21, 2010 1:11pm
Q

queencitybuckeye

Senior Member

7,117 posts
Jul 21, 2010 1:28 PM
The best alternative method to buying an item is caysh.

Debt for lifestyle items is a terrible way to go IMO.
Jul 21, 2010 1:28pm
M

MontyBrunswick

Jul 21, 2010 1:29 PM
you're essentially mortgaging a TV...
Jul 21, 2010 1:29pm
se-alum's avatar

se-alum

The Biggest Boss

13,948 posts
Jul 21, 2010 1:42 PM
Obviously cash is the best option, it makes me laugh everytime someone comes on to one of these threads saying you should use cash. The obvious downside to RTO is the fact that you'll be paying alot more for the asset. However, there is a little upside to RTO. It's not a credit transaction per se, although interest is built into the "payment plan", so if there is a chance that she can't really afford it, and may have to stop making payments, it won't affect her credit score if they repossess the TV. I'm assuming she has poor credit if she has chosen this route, but she would be better off trying to secure a higher interest rate personal loan over a 36mo period. Her payments will be much smaller, and it will help to build her credit score.
Jul 21, 2010 1:42pm
KR1245's avatar

KR1245

Senior Member

4,317 posts
Jul 21, 2010 1:51 PM
se-alum;428963 wrote:Obviously cash is the best option, it makes me laugh everytime someone comes on to one of these threads saying you should use cash. The obvious downside to RTO is the fact that you'll be paying alot more for the asset. However, there is a little upside to RTO. It's not a credit transaction per se, although interest is built into the "payment plan", so if there is a chance that she can't really afford it, and may have to stop making payments, it won't affect her credit score if they repossess the TV. I'm assuming she has poor credit if she has chosen this route, but she would be better off trying to secure a higher interest rate personal loan over a 36mo period. Her payments will be much smaller, and it will help to build her credit score.

I dont know much about her credit history. I told her she would just be better off saving up until she could afford it. Shes a 20 yr old college student, she has a couple credit cards but I'm assuming the limit on them is around 500. When I asked her what her credit limit was she said "not much" so I just left it alone. I think shes pretty responsible with her money, she just doesnt have enough to go out and buy a TV right now and her credit history is limited.
Jul 21, 2010 1:51pm
se-alum's avatar

se-alum

The Biggest Boss

13,948 posts
Jul 21, 2010 2:07 PM
KR1245;428969 wrote:I dont know much about her credit history. I told her she would just be better off saving up until she could afford it. Shes a 20 yr old college student, she has a couple credit cards but I'm assuming the limit on them is around 500. When I asked her what her credit limit was she said "not much" so I just left it alone. I think shes pretty responsible with her money, she just doesnt have enough to go out and buy a TV right now and her credit history is limited.
As long as her credit history is just limited, and not bad, she shouldn't have much of a problem securing a small personal loan, and it will go along way toward helping her secure loans when she is out of college and needing to buy bigger items(ie.house,car). She will regret going through RTO if it's not a last resort situation.
Jul 21, 2010 2:07pm
M

MontyBrunswick

Jul 21, 2010 2:08 PM
KR1245;428969 wrote:I dont know much about her credit history. I told her she would just be better off saving up until she could afford it. Shes a 20 yr old college student, she has a couple credit cards but I'm assuming the limit on them is around 500. When I asked her what her credit limit was she said "not much" so I just left it alone. I think shes pretty responsible with her money, she just doesnt have enough to go out and buy a TV right now and her credit history is limited.

My credit limit is $500 but that's because I got a card without a co-signer right out of high school. It wouldn't surprise me if her limit was higher than that.
Jul 21, 2010 2:08pm
T

Tiernan

Senior Member

13,021 posts
Jul 21, 2010 2:19 PM
RTO is the ghetto way to prosperity. Ever notice how these places ain't exactly located on the upper crust side of towns? Tell her not to go down this road, she will regret it.
Jul 21, 2010 2:19pm
ZWICK 4 PREZ's avatar

ZWICK 4 PREZ

Senior Member

7,733 posts
Jul 21, 2010 2:21 PM
I'd steal one if I were her. Drive around and find someone who puts the empty tv box on the curb for the trash pickup, and come back later that night.
Jul 21, 2010 2:21pm
C

Con_Alma

Senior Member

12,198 posts
Jul 21, 2010 5:45 PM
KR1245;428969 wrote:... I think shes pretty responsible with her money, she just doesnt have enough to go out and buy a TV right now and her credit history is limited.
If she is truly responsible with her money she will take the amount she would be paying the rent to own company on a monthly basis and start saving it until she accumulates enough to buy the TV.
Jul 21, 2010 5:45pm
Q

queencitybuckeye

Senior Member

7,117 posts
Jul 21, 2010 5:48 PM
Con_Alma;429261 wrote:If she is truly responsible with her money she will take the amount she would be paying the rent to own company on a monthly basis and start saving it until she accumulates enough to buy the TV.

/thread
Jul 21, 2010 5:48pm
iclfan2's avatar

iclfan2

Reppin' the 330/216/843

6,360 posts
Jul 21, 2010 7:25 PM
RTO is a terrible idea, especially if you are 20. Tell her to get friends and watch it at their house while saving up to purchase one on her own. You can get a decent HD LCD around 40 inches for $500.
Jul 21, 2010 7:25pm
S

Sonofanump

Jul 21, 2010 7:31 PM
What is the interest rate at these places? I thought it was outrageous.
Jul 21, 2010 7:31pm
se-alum's avatar

se-alum

The Biggest Boss

13,948 posts
Jul 21, 2010 7:37 PM
Con_Alma;429261 wrote:If she is truly responsible with her money she will take the amount she would be paying the rent to own company on a monthly basis and start saving it until she accumulates enough to buy the TV.

Been waiting for this response since the thread started....
Jul 21, 2010 7:37pm
se-alum's avatar

se-alum

The Biggest Boss

13,948 posts
Jul 21, 2010 7:38 PM
Sonofanump;429330 wrote:What is the interest rate at these places? I thought it was outrageous.

Technically, there is no interest rate, as it is a non-credit transaction. However, it really is built into the payment plan.
Jul 21, 2010 7:38pm
Ytowngirlinfla's avatar

Ytowngirlinfla

I wear real chevrons!

2,295 posts
Jul 21, 2010 8:40 PM
If she has good credit then why not go to Best Buy and apply for their credit card. Usually buying a tv they'll do a same as cash financing thing for 12 to 18 months. It also helps her credit building.
Jul 21, 2010 8:40pm
G

gut

Senior Member

15,058 posts
Jul 21, 2010 8:51 PM
se-alum;429339 wrote:Technically, there is no interest rate, as it is a non-credit transaction. However, it really is built into the payment plan.

Probably at an implied interest rate of 20% or more.

Agree with the Best Buy suggestion. If you are looking to do RTO, then you are buying something you can't afford. Plain and simple, it's a path to financial ruin.

I can think of just three smart and valid reasons to finance (assuming the person is responsible):
1) buying a home
2) student loans
3) leasing a car (*only because the higher cost is a reasonable trade-off for some that like new cars every 2-3 years, but only when rates are 4-5% instead of 8-10% like they were there for awhile). The break-even on lease vs. buy new is probably 6-8 years. Obviously the smart money buys used cars for cash, but that's not for everyone.

Credit card debt is foolish. I have credit cards I use in place of cash - my balances are paid-off in full every month.
Jul 21, 2010 8:51pm
se-alum's avatar

se-alum

The Biggest Boss

13,948 posts
Jul 21, 2010 9:27 PM
gut;429398 wrote:Probably at an implied interest rate of 20% or more.

Agree with the Best Buy suggestion. If you are looking to do RTO, then you are buying something you can't afford. Plain and simple, it's a path to financial ruin.

I can think of just three smart and valid reasons to finance (assuming the person is responsible):
1) buying a home
2) student loans
3) leasing a car (*only because the higher cost is a reasonable trade-off for some that like new cars every 2-3 years, but only when rates are 4-5% instead of 8-10% like they were there for awhile). The break-even on lease vs. buy new is probably 6-8 years. Obviously the smart money buys used cars for cash, but that's not for everyone.

Credit card debt is foolish. I have credit cards I use in place of cash - my balances are paid-off in full every month.
Not real easy to finance a home with no credit history though. Small personal loans are a good way to build your credit history.
Jul 21, 2010 9:27pm
G

gut

Senior Member

15,058 posts
Jul 21, 2010 9:37 PM
se-alum;429438 wrote:Not real easy to finance a home with no credit history though. Small personal loans are a good way to build your credit history.
A steady job and income/mortgage ratio are big, big factors though. And it does mention she has a credit card. Financing a new or used vehicle purchase is a good way to build credit history as well, even if you just get the loan and pay off in a few months. No credit history is far superior to a bad credit history. All those store credit cards you sign-up for to get discounts that day also build history. Another factor is your avg% of available credit used (doesn't seem right, $500 should be $500 whether it's 10% of your limit or 50%). Longevity counts, too, and they say you should generally avoid cancelling cards especially if you have been with someone a long time.

Interest rates for student loans are so low that, if you qualify, it's almost foolish not to take out the federal limits (whatever that is). At 2% or whatever the federal assistance rate is, it's some of the best debt you will ever be able to get, much better than a car loan (and much much better than credit card debt) but obviously not as good as a loan for an appreciating asset (until recently) like a home.
Jul 21, 2010 9:37pm
iclfan2's avatar

iclfan2

Reppin' the 330/216/843

6,360 posts
Jul 21, 2010 9:38 PM
se-alum;429438 wrote:Not real easy to finance a home with no credit history though. Small personal loans are a good way to build your credit history.

If you have to get a loan for a TV, you shouldn't have a tv.
Jul 21, 2010 9:38pm