Financial Analyst Ryan Mack Speaks Out Against The “Scam” That Is Rent-A-Center

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Many people in this country are not ready yet to purchase their first home (but with proper planning everyone can purchase a home).  However, what about a sofa or a television set?  Are your sites set so low that you feel that you do not have the ability to own your own DVD player?  If the answer is yes, and you have the desire to pay exorbitant interest rates on items that you have yet to even own, then Rent-A-Center has built a business model especially for you.

I had to see just how much interest Rent-A-Center charges so I called them myself and acted as if I were a customer wondering about their terms.  I asked how much it would cost to purchase four items which included a regular sofa and love seat set, a leather sofa and love seat set, a 26 inch television set, and a 52 inch television set.  For each I got the price that it would cost to rent it from Rent-A-Center on a weekly basis, how long it would take to own the product, and found the retail price of a similar product from Amazon.com.  The results were amazing and are listed below.

Regular Sofa and Love Seat:

Weekly Payment = $19.99
Retail Value = $900
Weeks Until You Own From Rent-A-Center = 78
Interest Rate = 80%
Interest Paid = $659
Total Paid = $1,559 for a $900 Sofa

Leather Sofa and Love Seat:

Weekly Payment = $30.99
Retail Value = $2,000
Weeks Until You Own From Rent-A-Center = 78
Interest Rate = 26%
Interest Paid = $417
Total Paid = $2,417 for a $2000 Sofa

26 Inch Sony Bravio TV:

Weekly Payment = $17.99
Retail Value = $550
Weeks Until You Own From Rent-A-Center = 104
Interest Rate = 163%
Interest Paid = $1,321
Total Paid = $1,871 for a $550 Television

52 Inch Sony Bravio TV:

Weekly Payment = $59.99
Retail Value = $1900
Weeks Until You Own From Rent-A-Center = 116
Interest Rate = 159%
Interest Paid = $5,059
Total Paid = $6,959 for a $1,900 Television

As you can see from the chart there is a clear disadvantage from those who choose the Rent-A-Center way versus those who choose to be prudent about how they purchase items for their house.  If you take the 52-inch Sony Bravio television, which retails for $1900, one could use the $59.99 that he/she would be giving to RAC to purchase the product and putting it into a savings account.  Doing it the smart way would allow you to purchase this TV in just 31 weeks.  However, through RAC you would be paying on that TV for a total of 116 weeks before you actually own it.  Over that time period you would pay a total of $6,959.  When you subtract the total paid ($6,959) from the retail value of the TV ($1900) I calculated that you would have paid over $5000 in interest at a rate of 159%.  Being prudent saves you 85 weeks of payments and over $5000 that you could have used to put towards retirement, a new home, a business, or another more meaningful use.  Doing it the smart way you could almost purchase 4 TVs of an equivalent price in the time that it takes you to purchase just one TV doing it the RAC way.

If you ever feel the urge to ever use Rent-A-Center please consider paying a visit to your local Salvation Army and purchasing a temporary inexpensive piece of furniture.  The money that you would be paying to RAC for paying the weekly rental payments deposit in a savings account until you can purchase the furniture or product that you truly wanted for your home. I remember growing up when we had the same black and white TV, with no channel turning knobs (we needed to use pliers), and no antenna (we needed to use the wire clothing hanger to act as rabbit ears to get good reception) for years while many of my friends had the more updated color television sets. My mother didn’t want to purchase a LUXURY ITEM such as a new color television until all of our NECESITIES were provided for which placed a TV as a very low priority in our household! If it worked for her, it will work for you!

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