Rent-to-own businesses: A closer look at the hidden costs

COLUMBUS, Ohio — Rent-to-own businesses like Aaron’s and Rent-A-Center have long enticed consumers, particularly those from lower-income brackets, with the promise of acquiring home furnishings, electronics, and appliances with little to no upfront costs and the prospect of ownership over time. However, beneath the veneer of convenience lies a troubling reality.

Sky-High Prices and Hidden Fees

One of the most significant issues with rent-to-own agreements is the exorbitant prices. Customers often end up paying far more over the rental period than they would if they had bought the item outright. This can lead to a cycle of debt for individuals who are already financially vulnerable.

In addition to high rents, these businesses frequently impose hidden fees and costs. Nonrefundable option fees can trap customers, as they lose money if they decide not to purchase the item. Moreover, customers might also be responsible for maintenance costs, insurance, and property taxes, further inflating the total cost.

Predatory Practices Targeting the Vulnerable

Critics argue that rent-to-own businesses specifically target low-income individuals who may lack access to traditional credit. These customers are more likely to miss payments, leading to hefty late fees and even repossession of the rented items. This predatory practice exacerbates financial instability among those who can least afford it.

Industry Statistics Paint a Grim Picture

• There are approximately 9,200 rent-to-own stores in operation, serving 4.8 million customers annually.
• The average store generates an annual revenue of $736,000 and serves 360 customers each year.
• Despite a dip in revenue from $8.5 billion in 2011 to $7.9 billion in 2014, the industry rebounded to $8.6 billion in 2015 and 2016.
• The number of brick-and-mortar stores has been declining, with 7,100 stores in 2014, 6,900 in 2015, and 6,700 in 2016.

These statistics highlight the pervasive reach and impact of rent-to-own businesses, particularly in low-income communities.

While rent-to-own businesses may appear to offer a convenient solution for those unable to afford upfront costs, the hidden fees, high rents, and potential for crippling debt make it a risky option. Consumers need to be fully aware of these risks and consider alternative financing options before entering into a rent-to-own agreement.