Why Renting to Own is Not All that It's Cracked Up to Be

Not everyone has good credit, let's face it, stuff happens, and sometimes no matter how hard a person tries there is nothing they can do to stop their credit record from going into the toilet. People lose their jobs, get injured during a period when they have no health insurance and myriad other things, any and all of which can quickly destroy your credit score, making it nigh onto impossible to purchase many things, including a home. That's when some companies and property owners got downright enterprising, they came up with the whole rent-to-own idea.

Basically rent-to-own is just what it sounds like, you purchase an item and make monthly payments on it until you pay it off. While there is no interest per se, there might as well be. While rent-to-own sounds like a good deal initially, in reality it is just another way for your money to go down the drain quickly. Oh, and if you stop making payments for any reason you can get into real trouble; you can have the property repossessed and even mess up your credit record worse than it already is. While the idea of making a small monthly payment on an item until it is paid off seems like a good deal, especially if you need an item badly, it really isn't. Once you do the basic math, it quickly becomes apparent that to purchase any item over a long-term period this way, you will wind up spending twice or three times what the product is actually worth.

Another thing to take into account is that while you don't pay interest, if you live in a state that has a sales tax, you will have to add the cost of that into your total payment as well when you are doing the basic math.

Most of the time when you hear the words rent-to-own, you think of appliances and the many retail Rent A Centers and their copycats that have popped up in recent years, but appliances and furniture are not the only things that are purchased on a rent-to-own basis. Believe it or not some property owners are selling homes this way as well. Under the guise of helping the person who has bad credit, or no credit and who wants to own their own home, they offer the option of renting to own your own home. Now some property owners really are trying to be helpful when they offer this option, but be aware that some are not. Make sure you discuss the contract in detail with your landlord, and that you get it in writing because some property owners use this option as a way to generate income for themselves by drawing out the terms of the contract over several years.

Keeping in mind that rent-to-own is not always your best option no matter how good the deal might seem will go a long ways towards protecting yourself, and your loved ones financially.