People with low income or bad credit generally seek rent-to-own schemes. An individual with a home that has not sold may offer a rent-to-own contract without a down payment or credit check. Businesses sell everything from electronics and furniture to automobiles in exchange for regular payments, sometimes weekly. Unfortunately, people with low income are the most likely to suffer the consequences of a rent-to-own contract.
Rent-to-Own Contracts
When you buy something on a rent-to-own contract, you are technically renting the item for the entire length of the contract. You do not own the property or merchandise until you have satisfied the contract in full.
Real Estate
The laws of the state where the real estate is physically located determine what rights you have as a buyer on a rent-to-own real estate contract. Many states do not have any regulations in place. This means that the seller does not have to record the transaction at the county clerk's office, and the property remains in his name. If you default on your lease, or have trouble financing a balloon payment, then you lose every penny that you paid toward purchasing the home. Additionally, you may be required to pay for all maintenance, even problems that existed before you signed the contract. Even if you honor all parts of the contract, you may still lose all of your money if the seller allows the property to go into foreclosure.
Motor Vehicles
If you buy a car or truck on a rent-to-own contract, you may face additional expenses and potential problems that do not exist when you purchase a vehicle through traditional financial institutions. Rent-to-own companies install a "kill switch" under the hood that prevents the ignition from starting the car. If you are one day late making the payment, then you may find yourself stranded away from home. You may have to pay additional fees to the dealership before they activate the ignition.
Electronics and Furniture
According to the contract with the rent-to-own store, you may have to pay the full balance immediately if you skip a payment on the contract. Additionally, the interest rate may increase to the highest amount allowed by the laws of your state. Even if you make all of the payments on time, you will be paying much more than the merchandise is worth, according to University of Wisconsin Extension.
0 comments:
Post a Comment