Consumer Loan Versus Rent-to-Own

Example:  A local electronics store was selling the television Chris wanted for $500.  A nearby rent-to-own store advertised the same model for $15. a week.  The manager told Chris he would own the television in 72 weeks.

Chris decided to purchase the television at the electronics store for $500.  He was able to obtain a 1-year installment loan with a 21% APR.

As shown in the table below, using a rent-to-own store would have cost Chris $1,080.  By obtaining a short-term installment loan, Chris saved $521.20 ($1,080 - $558.72 = $521.20).

Although $15 a week sounds affordable, it can actually cost you more in the end.