Buying from Rent A Center is Like Using the Worst Credit Card Ever

There is a short list of businesses I will never set foot in because I already know they are a rip-off.

They are actually in attached buildings: Check-into-Cash, Mac's Corner Market, Duke of Suds Laundromat and Rent A Center. These are the anchor stores in the High Price of Being Broke mini-mall.

 

Buying stuff that you can't afford is a habit commonly supported by Visa and MasterCard, but they aren't an option for everyone. A much more exciting option is Rent A Center.

Rent A Center sells rents a surprisingly succinct set of items: laptops, tables and chairs, televisions, couches and recliners. You can buy items outright, or bring them home and pay a little bit at a time from your paycheck.

No Credit Check
What sets Rent A Center apart is that your credit rating is never checked or considered. Instead, they ask you to fill out a rental application with info about your job, home and car, and for at least two personal references. If your job and references back you up, that's all you need. They'll rent to you.

Rent A Center is taking a little risk renting out $1,000 TVs with no deposit, so they charge a little more.
But how much more?

Surprisingly, the grim details are right on the shelf tags. These have got to be the scariest price tags on display in all of retail.

On this particular Rent A Center tag:

Cash Price - $1704.00
Cost of Rental - $2,135.04
Total of Payments - $3,839.04

 

Retail Prices
Every item at Rent A Center has a cash price posted. Although I doubt anyone buys anything at Rent A Center, it is the price upon which all the rental fees are calculated.

The prices are high.
I found the same model of 52" Sony Television at Best Buy for $1799, which was actually a higher price, but then I remembered that the $1704 TV at RentACenter was used.

Laptops for rent to own.

 

 

 

 

 

 

More Price Comparisions:

52" Sony LCD TV
Rentacenter
Best Buy
$1704 (used)
$1799

42" Panasonic TV
Rentacenter
Target
$758
$599

Compaq Laptop
Rentacenter
Best Buy
$571
$369

 

Renting is Expensive
The area in which RentACenter has an advantage is when you really do want to rent something. I don't want to imply that it is actually cheap, but RentACenter prices are definitely better than the jaw-dropping costs of traditional party and tool rentals. For example, if you want to rent a $45 chaffing dish from Aba Daba Rents, it might cost $20 for three days.

From RentACenter, most of their items have a one-month minimum rental period, so while renting a TV just for the Superbowl might be prohibitively expensive, renting one for the Olympic games might make sense. In the case of the 52" Sony, the minimum rental would be four weeks for $159.96 (4 x $39.99).

For comparison, a 52" TV from ATV Video Rental in Sacramento costs $200 per day.

 

Compared to Buying with Credit Cards
If you are buying something at Rent A Center, the total price will be equivalent to having the purchase on a credit card with a really high annual percentage rate (APR).

How high? Take a guess.

For example, in the case of a Sony 52" LCD TV, Paying cash would cost $1,704.

If you put a $1,704 TV on a typical Visa card (23% APR) and paid it off with $172 monthly payments, you'd add $203 in interest for a total price of $1,907.

Best Buy has a better credit card which offers a lower interest rate (12%).

At that rate, if you paid $1,704 off in 21 months, you'd only need to make $91 monthly payments to pay off $1704. ($192.23 in interest, total price $1,896).

 

For fun, I set up the spreadsheet to calculate how much the tv would cost if I bought it with a credit card with an astoundingly high 100% APR.
What do you know?

With 100% yearly interest over 22 months, you'd end up paying $2,156 in interest, totalling $3,839!

The same total and term as the RentaCenter "Rent to Own" price!

Summary
So there you are. Buying TVs at Rent A Center is like buying them with a credit card with 100% APR.
Expensive.

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