Using Rent-to-Own and Lease-to-Own Plans

Some stores offer rent-to-own or lease-to-own plans for more expensive items like furniture or electronics. If you choose one of these plans, you’ll sign a contract agreeing to make regular weekly or monthly payments, either to the store or an outside company, and then you get to take the item home.

How rent-to-own and lease-to-own plans work

Here's what to know if you choose a rent-to-own or lease-to-own plan to pay for an item:

• You might get to choose the length of the contract term.

  • A longer contract term means you’ll pay less each month, but in the end, you’ll pay more in total through price markups and fees.

  • A shorter contract term means you’ll pay more each month, but in the end, you’ll pay less in total than with a longer contract.

• The plan might check your credit, or it might offer no credit checks. Some plans report your payments to the credit bureaus, but others don’t.

• The automatic payments (including fees and interest) you set up with your debit card, credit card, or bank account happen like clockwork — even if you don’t have enough money in your account on the due date or you’ve reached your credit limit.

• If you change your mind about the item, you might have the choice to return it to the store and stop making payments. But you probably won’t get back the money you already paid.

• If you miss a payment, you might lose both the item and all the money you paid toward it.

Stores that offer rent-to-own or lease-to-own plans often promote what they think are benefits: choice of different repayment periods, no credit check, automatic withdrawals, and fast approval. But that convenience — for example, getting to use a washing machine while you’re paying it off — can mean you pay twice what you’d pay in cash.

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