What do families do when they are out of credit? Payday loans come with huge interest rates. They are often used to pay off old loans. What remains is used for necessities, like food and gas.
But what about that TV you want? That sofa you have to have? The solution to how to get what you want or need is everywhere. The business is called Rent-to-Own.
Rent-to-own is more like leasing than using credit. Most state laws on usury (excessive interest rates) do not cover leases. The interest rates on a “lease” can be whatever the traffic will bear. Paying 100 percent a year in interest is not uncommon.
However, it is usually only a few weeks before the rent-to-own company comes to your home to take back the TV or the sofa for non-payment.
There is a brutal truth to the post-Great Recession era. More than 40 percent of American families are making less in purchasing dollars than they did in 2007.
In many of these families, their income comes from more than one part-time job.
The rent-to-own industry has been growing by leaps and bounds. It replaces stores like Walmart and Target. It is different than lay-away plans that allow buyers to pay down an item before they actually get it. It meets the needs of poor consumers who want something they cannot afford.
Some of the rent-to-own businesses know they are taking advantage of customers. They say there is a demand for their services. They say if they do not provide the service someone else will. They point to the growing number of rent-to-own websites.
Governments may try to restrict the rent-to-own businesses. Nevertheless, the world knows there is always a way for buyers and sellers to find one another.
Source: The Washington Post October 16, 2014