Rent-To-Own
Rent-A-Center
What Is This Type Of Credit?
It is when you are leasing out a home, car, furniture, etc. to someone. They are making monthly payments according to their interest rates & fees.
Interest rates & fees are calculated by subtracting the fee from the rent to own price. Multiply the interest by the loan. Divide the annual interest rate by 12.
When Might A Consumer Seek This Type Of Credit? & What Are Other Sources Of This Credit?
A consumer may look for this type of credit when they are in need of a vehicle, home, etc.
Aaron's is another source of this credit other than Rent-A-Center.
Average APR: 15-20%
sources: www.consumer.ftc.gov www.banking.about.com
What Are The Advantages & Disadvantages?
Advantages:
-You can buy things with bad credit.
-This is a way to earn income on property.
Disadvantages:
-If you do not "buy" the home, ect., you lose all of the extra money you put into it.
-There has been several rent-to-own scams.
What Are Three Alternatives Consumers Should Consider Before Using This Credit?
Find out whether you qualify for store financing.
Consider layaway- putting money down & paying overtime.
Think about whether you have room on you credit card.