Renting Furniture is a Bad Idea!

How expensive is it to buy rent-to-own furniture?

Short answer: VERY EXPENSIVE!

I was on the Rent-A-Center website and I found this Ashley sofa and loveseat:

Ashley Bay City

I called up a local Rent-A-Center and asked the guy how much this set goes for. He told me that just the sofa and loveseat rents for $26.99 per week for a 104 week term. So, the total purchase price for this sofa and loveseat (WITHOUT tables) would be $2,806.96! That sounds like a lot but I needed something to base that number off of so I called our local Ashley furniture store to get their prices for the EXACT same sofa and loveseat. Their prices were $549 for the sofa and $499 for the loveseat for a total of $1,048.

Now, here’s what the numbers look like using $1,048 as the purchase price:

Rent-to-Own Math

So, paying $26.99 for 104 weeks, works out to a 121.89% APR!

I think if it were me, I would sit on the floor until I had enough money to pay cash! Think about it. At $1,048, it would take a person 39 weeks to save up enough money to pay cash for the furniture if they saved $26.99 per week. Patience can save you a ton of money!

Why would anyone want to rent furniture?

44 thoughts on “Renting Furniture is a Bad Idea!”

  1. TFB,

    Actually, after writing that post I started thinking to myself that maybe I should get into that business!

  2. geez, i’m in the wrong business. rent a center franchise here i come. ok seriously…

    121% apr? whoa nelly!!!

    you asked a question why would anyone rent furniture: i’ve seen on hgtv where they rent furniture to stage homes for a sale. i’m sure it’s only for a few weeks and not the duration of the loan period. but, i could be wrong. please don’t kick me ok 🙂

  3. also, you could “rent” the furniture by putting it on a credit card. At 18% interest, that’s still a ton better than Rent-A-Center. Those places market to the poor who have trouble seeing long term and also lack the resources to save up and buy it all at once.

  4. One reason that I’ve heard for renting furniture is if you’re only temporarily in a location. Rent the furniture for a year, and the store will pick it up when you’re done. Yes, it’s more expensive, but if you aren’t planning on keeping the furniture anyway then maybe it’s worth it.

  5. There are some things I’d rather rent than buy: Cars and boats for example. I could afford to buy them w/cash. But my use is so limited that it is much more economically feasible for me to only pay for what I use, thereby sharing the operating and depreciation expense with others, and having more funds to invest in appreciating assets.

    I don’t own or lease a car, I simply rent them when I need them. I also charter (i.e. rent) a sailboat each season rather than owning. Same thing for vacation properties – rent vs. own.

    I am missing out on a certain level of being able to customize these things, but on the other hand, I get to switch to different models, locations, etc. for variety.

    Furniture, on the other hand, I don’t think I’d ever rent – but I should never say never.

  6. One reason to rent furniture would be if you’re a “road-warrior”, i.e. a consultant who spends 4-5 days a week away from home and your client pays for a corporate apartment.

    Is this really the majority of their business? I doubt it.

  7. Same reason people rent cars for temporary accomodations. Most people rent furniture to stage houses.

    Renting furniture for about 2 or 3 weeks is OK, But rent to own is like paying for it twice.

  8. A book I read a few years ago, The Credit Card Nation, talked about this part of our economy. The author’s research showed that a majority of the time, the store will rent these products to people who can’t afford them knowing that they will, within a few weeks, turn around and repo the items in question and slap a collection suit against the renters. The store gets a few payments and the product back in relatively good condition to do it all over again. On a related note, when I moved across the state to my new house, the local rent-to-own store came in with the lowest bid (by a $1k), the reason? The manager has repo guys and truck on stand by, if they don’t have anything to pick up that day, they will move your stuff real cheap, they were even insured. Best moving experience of my life.

  9. As far as making a case for investing in RCII, haven’t they been getting these margins for years? What’s the catalyst for growth here? Are more people suddenly renting furniture? These are some of the questions that I would ask.

    Secondly, anyone who is using this for a long term solution (i.e. not staging) needs to look into Craigslist. It would be a huge savings over this (probably over $2500).

  10. I wonder how many of these are long-term, but temporary, employees renting apartments? Furnished apartments are relatively rare, and long-term stay hotels can get expensive. When we had an engineer from our Tokyo office getting long-term training in the US, our company set him up with an apartment near the office and rented furniture – it was cheaper for six months than an extended-stay hotel and was closer to work.

  11. Foobarista,

    These companies seem to advertise with the intent on getting people who have bad credit and want/need furniture right away. So, although something like rent-to-own may be used by companies for temporary workers, I would still say the vast majority of customers are people with poor credit.

  12. There are TWO typcs of rental furniture businesses. There are “rent to own”, which is the above example where you people really overpay…people with bad credit, etc.. Then there is a separate industry for “rent to rent”, meaning you are just renting the furniture temporarily with no intention of owning it. These are a different set of companies entirely. Rent to Rent is a very solid industry and viable option – and still “furniture rental” – but it is used temporarily…more for corporate apartments, home staging, events, etc… The companies I know in the “rent to rent” business hate being confused with the other guys.

  13. Anyone who I knew that RTO did it because they liked to have the “image” of having new stuff (big screen TV, new car, new furniture) despite seeing it repossessed not too far long after they got it in their apartment.

    It’s the irony of the instant gratification culture. Get the new stuff now rather than save for it. Send it back when it’s not cool and look like you’re richer than you are.

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  15. Holy cow!
    after i bought my first condo, we didn’t have any money to buy furniture.
    all we had was a really old love seat and a futon for furniture. And a rickety old ikea dinning table.
    the wife complained for 3+ years until we sold it, made a bundle and then we bought some decent furniture.
    Incidentally I bought it from Ashley but it was at a 50% discount! I got 2 micro-fiber(looks like suede) couches that look exactly like the ones in the picture for $550 delivered!

  16. I would appreciate it if someone out there can give me any ideas. My husband is a sheriffs deputy and I am a stay at home mother of 2. We are desperately trying to establish credit because we have a ZERO fico score 🙁 no bad credit just N-O-N-E. And no co-signers. They told me we need to get a small ( NOT large ) loan of some kind, I thought I would look into furniture b\c I would like to purchase new, ( my kiddos kinda destroyed old and with fingerprints and I would like to start over, if you know what I mean) Does anyone here know of a good not BAD!!! furniture financing center that excepts no credit?
    I would really appreciate any advice you may have time to give.
    Thank you Jessica
    (looking to establish credit for home loan)( Cant get good apr on credit cards etc.)

  17. on the flip side. If you bought that furniture on a credit card and your interest rate on that card is 18% and you paid your minimum 2% per month payment. It will take you 232 months (over 19 years) to be rid of your debt. In that time, you will pay $1,931.33 in interest. For a total of $2,931.00. Now most credit cards range between 20-25%. Look on best buys website i think their minimum apr is 19.8%

  18. Advantages of Renting to own
    One advantage of renting-to-own is the option of returning or replacing a product if damaged. I have been renting-to-own from RAC (Rent-A-Center) for many years. Every item I have purchased from RAC I have paid off but during the renting period I have been able to return or replace the product. For example I have been paying on a laptop for a few years now and I’ve had to replace the battery pack once and the battery charger once. I have about a year left on the contract so I may upgrade the unit before it’s paid off. With a credit card you are stuck with the product even if it is unfixable.
    Another advantage is not having the risk of hurting my credit. We can all agree that certain events happen in our lives that could hurt someone’s credit such as lost of job, being laid off or even getting injured. So, let’s say that in the next 3 months a series of events occurs prohibiting me to pay the rent of my laptop. If I’ve paid my payments in those 3 months in the 4th month I can return the laptop without it affecting my credit or adding interest rates that occurs with a credit card. With a credit card you still have to pay the bill and also worry about those annoying debt collectors who don’t care about your problems. On the other hand with Rent A Center any money that I have paid into the laptop is available for me later because of their Lifetime Reinstatement policy which allows me to start where I left off in my payments and what is even better is that they also offer a program called benefits plus in which if I was laid off that program would kick in and make payments for me while I was away from work.

    Heres another, lets say I want to purchase using a credit card and the interest rate is 18% which is low for retail credit card. If I just made the minimum payments and my purchase was $1500.00 then it would take me 313 months (which is over 26 years) and I would have paid a total of $4931.00 including interest and my merchandise would be beyond out dated and who knows how many malfunctions it could have had. I know you can own most items in a Rent a Center in 2 years or less and you wont pay triple what its worth.

    Finally I know that a lot of people offer interest free initial financing well I believe Rent-A-Center offers their products at a fair retail price and will honor that price for 90 days while having the merchandise in your home with no embarrassing if denied credit checks.

    People say that the rent to own way to purchase is a ripoff but I think otherwise

  19. I knew someone who shopped at RTO. The only reason you do it is if you need/want furniture or appliances, can’t handle saving up and/or buying used, and your credit is already so tanked you couldn’t finance a stick of gum.

  20. Be careful about assuming that RTO doesn’t affect your credit. TRS (The internal RTO company of Ashley Furniture) reports your payments to the credit companies on a monthly basis. If you are a day late, they report it, if you return the merchandise or have it taken back, they report that as well. I don’t know if RAC operates in the same manner, but it would be wise to check.

  21. I used a rent to own twice about 10 years ago with good results. We had filed bankruptcy, and of course the refrigerator, then the washer and dryer decided to bite the dust. We used the 90 days same as cash and the prices were comparable to other stores and the products were name brands. I agree with not buying on the long term payment plans, but if you can pay for the items in the 90 days same as cash, they can be a good deal.

  22. I really needed couches but could not afford the full price. So I went to rent a center. I was told that if I pay off the couches in three months I pay average price for them. If I go over the three months then I will be stuck in there 1 year contract. I was also told that if I return my couches in three months and decided on another set that the money I put down on the first set would roll over to my new set and I would get another 3 months to pay them off. I got my washer, dryer, couches, and my 42″ flat screen TV and now want to back for a bedroom set.

  23. I rented (to own)a top of the line washer and dryer from Aarons sales and leasing. At Aarons you can pay off 90 days same as cash. After that you can still pay off early and save the lion’s share of additional “interest.” It’s not truly interest, but at the end of the day, everytime I made a payment I reduced my principal by an amount equal to about 60% of my monthly payment. Sure there are better options for people who have made few if any mistakes, but for me it was actually a fair deal.

  24. everything is economics. rent to own is a rip off. walmart put mom and pop out of business. not to mention the average item sold by walmart has 350% markup(who cares the average ticket is $20.).

    i have rent a washer from a local rent to own store.i was paying 18.35 a week for 104 weeks. in those 2 years. they delivery my washer and dryer. set them up. repair my washer twice, dryer once.they had give a loaner drye while my original dryer was on repair. they move washer and dryer, to my new address. every week when i was gong to pay,they greet me by my name. their service is overwhelming.

    the economics is overlook.
    you can’t put price on conveniece.service.worry free. the most friendly people.

  25. Not everyone who can’t get credit and has to rent to own has bad credit. I, and many other young people, don’t have credit and with the credit crunch can’t get hardly any credit, and the credit cards available have ridiculously high APR’s.

    And some people just don’t want credit.

  26. Not everyone who can’t get credit and has to rent to own has bad credit. I, and many other young people, don’t have credit and with the credit crunch can’t get hardly any credit, and the credit cards available have ridiculously high APR’s.

  27. From what I understand, furniture rental companies are supposed to be used for real estate. They are good for real estate agents to go in and rent a house full of furniture, that way the prospect buyer can see what furniture will look like in the designated space. That way they aren’t just walking into an empty house with no ideas. Then if they like the furniture the company can sell them the furniture with the house.

  28. Actually, renting to own furniture is not a bad idea, if you pay it in the “90 days, same as cash” or “6 months, same as cash” time period. However, don’t be late on a payment cause they’ll sock you with the penalties. I purchased my washer & dryer, and refrigerator this way, and after shopping around found the prices to actually be better than some of the bigger, well known discount stores! So it’s up to you if it’s a good idea to “rent to own”! Just remember, pay it off within the no interest period!

  29. I think you all fail to see the bigger picture, think college student.
    Individuals who are already in 1000s of dollars in debt, whom do have credit because of it but do not have the income to have a large credit card.
    While most could drop 500 there or 300 on a cc most college students have a max limit of 500, 500 will not buy you much in the way of furniture.
    Rent to Own’s seem like a good idea, especially for a hectic college student that is going from final to final to summer job back to final. College student move more often and thus their furniture is also temporary.

  30. College students strapped for cash really should be checking Craigslist, not renting something for 500. Just make sure to make friends with someone with a pickup truck or trailer. And at least 3 strong friends.

  31. Some who comment on here don’t seem informed on these stores, but just want to spout off with an opinion. Thank you for those of you who are informed and are trying to explain. Some of these companies do not even require credit! They don’t check or report to the credit agencies. You can but a couch for the same price as a furniture store if you pay it off within the 3 (or 6 months). It’s for those in the lower class who live from paycheck to paycheck who want to have something nice. Sure it may cost double, but they may not be able to save for it because with everyones life things come up that require money. So if that were to happen, they can call up the company and return it. When they can afford it again, they can go back to the company and get it without having to forefit their pervious payments. Also, if you go past the 3 months and do start paying interest you can pay it in full at any time. Not the 1500 or 1800, but the 700 or 800 initial price of the item. You pay interest for a short while but for some that’s all they can do.

  32. The big money in the rental game where i’ve found a market are the mining companies bring in people from overseas and their homes need furnishing now where not talking dump truck drivers but they have rented from us but the executive personal that travel around the world. In some cases the monthly rent is probably nearly as much as some peoples monthly wage ($3500) but that is everything from rugs to paintings, 50′ 3D LED’s to made beds with fresh new linen.
    So renting is for people for short stays and people with bad credit.
    This is a good site i will be back….

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