The Ultimate Rent-to-Own Quiz

By: Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

As the American economy continues to decline and more and more people find themselves bankrupt with no savings, rent-to-own stores are becoming more popular. Rent-to-own allows you to purchase big-ticket items, like a refrigerator or computer, regardless of your financial situation. Rent-to-own, however, does come with its own drawbacks.

Who do rent-to-own stores cater to?

Rent-to-own stores typically cater to the working poor who don't have enough savings or credit to purchase big ticket items, like a new refrigerator.

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What is rent-to-own?

Rent-to-own involves paying for a big-ticket item, like a television, on a payment plan. Once the payment plan is complete, you own the item.

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How much deposit do you typically need to put down for a rent-to-own item?

One of the advantages of rent-to-own is that you typically do not need to make a large lump sum deposit.

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How long are people required to make payments on a rent-to-own plan?

You can stop making payments at any time, but of course, you must then return the item to the store. This means that you are not locked into any contract for continued payment.

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What credit rating must you have in order to qualify for a rent-to-own plan?

Rent-to-own stores do not rely on credit. This means that people with no credit rating, such as those who have claimed bankruptcy, can purchase a rent-to-own item.

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Besides those with no savings or credit history, who else can benefit from rent-to-own stores?

Seasonal workers, who need big-ticket items for short periods of time, may want to rent merchandise. Moreover, parents who need expensive children's items, like musical instruments, may want to rent rather than buy.

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What are other payment options for purchasing big-ticket items?

Other payment options include layaway and in-store credit, but these options are different from rent-to-own. Layaway requires you to make large payments in a short-period of time, while the item is kept in the store's possession. In-store credit involves steep interest rates and is essentially a loan, therefore you must have a credit rating to qualify.

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Which of the following scenarios makes the best financial sense?

Renting a big-ticket item for a moderate to long period of time, even if you eventually own the item, is not financially wise. You will end up paying huge interest rates.

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In total, how much more does a rent-to-own item cost compared to buying an item upfront?

Rent-to-own may seem like a dream come true, but keep in mind you end up paying three times as much. For example, a standard desktop computer that costs $800 up front, would cost you over $3,000 dollars in total on a rent-to-own plan.

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Why are rent-to-own stores potentially illegal in the United States?

The New Jersey Supreme Court in 2006 ruled that rent-to-own stores violated state law by charging over 30 percent interest to its customers.

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