Rent to own retail plans
What is a rent to own retail plan
Many retail companies offer rent to own plans for furniture, appliances, electronics, and cars.
These plans are also called:
- lease to own
- rent to buy
- option leases
- consumer leases
It’s usually an agreement between you and a retail company for the rental of an item. You spread your payments over a set period. You’ll own the item only if you meet the conditions in your agreement.
You may also need to pay fees. These may include an additional amount to pay if you want to purchase the item. If you no longer want to purchase the item, you may return it.
You may be able to get a rent to own option for a home. This is different from a rent to own retail plan.
Who offers rent to own retail plans
Normally, only retail companies specializing in the rental of products offer rent to own retail plans. These retail companies usually have a limited inventory and higher purchase prices than retail stores.
Here are a few examples of the types of rent to own retail companies:
- rent to own providers, also known as lease providers
- car rental companies
- used car dealerships
How rent to own retail plans work
Here’s what you might expect if you’re considering a rent to own retail plan.
What information you need to provide
Generally, a rent to own retail company will require proof that you have:
- a regular income
- a permanent address
Some retail companies will also ask you for references.
What a rent to own retail company needs to provide you
A rent to own company must typically provide you with specific information. There might be specific requirements in your province or territory relative to the information you should receive.
Making your payments
With a rent to own retail plan, you agree to make regular payments. You may be able to do so online, through your financial institution or in cash at the retail company’s establishment.
Delivery and set up
Many companies include the cost of delivery and set up in the rent to own retail plan. You might need to pay fees, such as shipping fees, if you decide to return an item. For more information on fees, check the terms and conditions of your rent to own agreement.
Learn more about what you need to know before you sign a contract.
Condition of the product
Ask if the product you’re getting is new or used. Some rent to own companies may offer used or refurbished products. These may include a product that has been repaired or restored.
They may also offer discontinued products and products no longer offered by a manufacturer. These products may be more difficult to replace or repair if something goes wrong. Check the rent to own company’s policy on repairs and replacements.
How much rent to own retail plans cost
With a rent to own retail plan, you may pay 2 to 5 times the regular retail price. Ask yourself if you need the item now, if it can wait, or if you need it at all. You may also consider comparing rent to own plans with other buying options.
Examples of other buying options include:
- buying the item outright
- using a credit card
- using a line of credit
This may help you determine if there are cheaper alternatives.
Many stores offer other financing options. These may include a retail credit card or a buy now, pay later plan. These are different from, and may be less expensive than, rent to own retail plans.
Learn more about choosing financial products and services that are right for you.
“Same as cash” option
Some rent to own retail companies offer an option called “same as cash.” With this option, you don’t pay additional fees if you pay the full amount within a set period. This is normally within 90 or 120 days of your purchase.
Using the “same as cash” option usually costs more than what you’d pay at a store. This is called a markup.
Compare the item’s rent to own price with similar products at retail stores.
How the rent to own company calculates your regular payments
With a rent to own plan, the company usually gives you a quote for your regular payment amount.
To calculate this amount, they usually use:
- the “same as cash” option’s retail price
- any other applicable fees
They divide this amount into equal payments. The regular payment amount might not seem expensive but consider the total cost before making your purchase. To calculate the total cost, multiply the regular payment amount by the number of payments in your contract.
For example, suppose you want to purchase a sofa.
The sofa costs:
- $800 at a retail store, or
- $1,350 with the “same as cash” option with a rent to own company
You choose to purchase the sofa with a rent to own plan. The company may offer you various payment options. These include fees in addition to the higher price.
Suppose they ask you to pay $22 per week for 104 weeks. In this case the sofa would cost you $2,288 ($22 × 104).
Figure 1: Comparing the cost of rent to own plans with the cost of retail purchases
Figure 1 – Text version
| Purchase option | Total purchase price (not including taxes) |
|---|---|
| Retail store | $800 |
| "Same as cash" | $1,350 |
| Rent to own retail plan | $2,288 |
Figure 1 shows a comparison of the cost of a rent to own plan and a retail purchase. These amounts are approximate and rounded to the nearest dollar.
What happens if you can’t make your payments
If you can’t make your payments, you may return the item to the company. You won’t get back the money you’ve paid.
If you miss a payment, 1 of the following things usually happens:
- the company takes back, or repossesses the item, or
- you need to pay for the item in full to keep it
You may also need to pay a penalty fee for breaking your agreement.
For more information on the consequences of missing a payment, check the terms and conditions of your agreement.
Pros and cons
Before getting an item with a rent to own retail plan, compare the pros and cons.
Pros
- You may purchase something you need and spread the payments over a period to fit your budget.
- You may get free repairs and/or replacements.
- You may qualify even if you have a low credit score or no credit score.
- By making your payments on time, you may improve your credit score. That’s the case if the company reports the payments to a credit bureau.
Cons
- You may need to pay fees.
- If you don’t pay on time, you may pay extra fees or lose the right to purchase the item.
- You may take on a debt that you can’t afford.
- It’s more expensive than other financing options.
- If you return the item, you may have to pay fees for wear and tear.
- Missing payments might lower your credit score if the company reports missed payments to a credit bureau.
Filing a complaint
If you have a complaint about your rent to own plan, contact the retail company directly. Ask them if they have a complaint-handling process.
You may also file a complaint with your provincial or territorial Consumer Affairs office. They oversee rules that apply to companies like retail stores.
Find your provincial or territorial Consumer Affairs office.
Related links
Page details
- Date modified: