Highway robbers
I spent Saturday afternoon emceeing the second annual East Raleigh Community Day, which went better than I expected considering it was the make-up day for the original August date. Anyway, I returned to my car to find a yellow paper stuffed under the windshield wiper.
It was an ad for Rent-A-Center, a rental appliance store at the other end of the shopping center. On the paper were the smiling mugs of Hulk Hogan and Troy Aikman, flashing thumbs up signs from the screen of an LG 60″ HDTV. Folks who don’t know any better could have this TV delivered for the special rental price of only $29.99 per week (regularly $39.99 per week). Yes, $29.99 per week. That’s supposedly a deal.
I checked the online sources and found a similar television (the LG-60PV450) for a price of $1000. Listen to Troy and Hulk, and at the end of the year you’ll have thrown over $1500 away renting a TV you could outright buy for $1000.
Instead, you could save your money and in 9 months you could buy it from a reputable store with cash. You could even get a share-secured loan from the credit union at 5% interst and in one year you could own it for just $22 a week.
These rental places know if they can sucker someone into paying for their appliances for over a year, they can make a killing. Sadly, there are folks who don’t know any better, fall for these pitches, and wind up throwing their money away.
The TV ad features a Sony 52″ LCD TV (model KDL52V5100) that can be had for $39.99 per week for 104 weeks, ringing up a total rental cost of $4,158.96. The lease service cost is $2,079.48 which makes Rent-A-Center’s claimed value of the TV as $2,079.48. This is nearly three times the TV’s street price of $825.
Thus, these poor folks who don’t know any better are paying more than 400% interest on these rentals. And, there’s no stopping once you’ve paid enough to equal the value of the rental: you have to complete the 104-week term to own the appliance outright without also purchasing an “early buyout option.” I can only guess what kind of steep fee that must be.
I don’t know how folks at companies like these sleep at night, preying on poor people who couldn’t possibly afford to pay these outrageous rental fees for appliances. It’s outrageous.
I had a friend that looked into a rental tv franchise as he approached retirement. The franchise company was very up front about the business model that rented the same tv over and over again, taking it back the first time someone missed a payment. My friend said he just wouldn’t have the heart to do it.
I suspect the company makes money two ways. People who buy the franchise and fail and people who make the franchise work on the backs of the ignorant.
If you only wanted it for The Big Game(tm), I could see it being plausibly worthwhile. If you want it more than that, though, it’s like those payday loan places that sprout like weeds in the less well-to-do parts of town 🙁