To Buy or Not to Buy? Why Opting for Rent-to-Own Products is Good for You

 

According to a 2021 report by APRO, Rent-to-Own (RTO) has become an $8.5 billion industry, which is primarily focused on big-ticket items such as electronics, appliances and furniture. Not to be confused with buy-now-pay-later method, RTO allows you to pay for a particular item in monthly installments. This paradigm is similar to that of a mortgage, where you purchase a house and make the monthly payments over a period of 10 to 15 years, though shorter for RTO.

So, what makes RTO so appealing? Here are a few of its characteristics:

  • Fast approval
  • No credit check
  • Low minimum deposits
  • Payment plans
  • Monthly, biweekly and weekly payments

Here’s an example to help you understand how RTO works:

Let’s say you want a washing machine. However, you don’t have the money to buy it outright. The following table explains three options for buying a washing machine and how much you will end up paying in each:

Top-Load With Dryer Washing Machine

Buying Method

Monthly Payment

Saving

Time Period

Ownership

Total Price

Rent-to-Own

$63

0

24 Months

2 Years

$1,512

Lease-to-Own

$126

0

12 Months

1 Year

$1,512

With Cash

 

$63

12 Months

1 Year

$759

 

RTO vs. Buy-Now-Pay-Later

For buy-now-pay-later model, the monthly payment is high and the time period is less. Usually, store owners ask the buyers to make the full payment in 3 to 5 goes. There’s no saving but the total price is the same as RTO… unless, the owner adds interest rate.

Advantages and Disadvantages of RTO

With an RTO plan, you get your product the day you sign the agreement. Meaning: You don’t have to wait till the last payment to own the product. Since there is no credit check, you can buy anything even with poor credit.

One of the best things about a RTO plan is that the payments are flexible. So, if you have a low budget, you can extend the time period to a maximum of 24 months. Since RTO does not include interest, you don’t end up paying extra. However, some stores charge a rental fee to make sure that if you decide to return the product, they will be able to pay for its maintenance or repairs without a loss. Therefore, you need to read the contract carefully as it can be complicated at some cases. 

To sum it up:

 

Advantages

Disadvantages

· Get the product without paying in full

Flexible payments

· Confusing contract

Rental fee

Easy qualification process and no credit check

Costlier than all-cash option


 

Keep in mind that with RTO, you might not always get a new product. Since this is a big industry, many people rent products with the purpose of returning them, which means that the product you will rent might be used.

However, this model is still a great option for those people who don’t have the cash to purchase a big-ticket item outright. So, there you have it ― a simple and convincing explanation to why opting for rent-to-own products is good for you.

 

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