Rent-to-Own Appliances: Pros & Cons

New appliances can be surprisingly expensive. A new refrigerator might run you $1,000 to $2,000, or more. Electronics and furniture can be even more expensive.

Lots of people cannot afford to buy these items outright. Many resort to using a credit card but that can lead to debt and can cost a lot in interest.

There may be an alternative: “rent-to-own appliances.” But what is rent-to-own? And what are the rent-to-own pros and cons? 

What is rent-to-own?

Rent-to-own is a type of transaction where the customer pays for the item over time, instead of paying upfront. 

Rent-to-own agreements usually require weekly, biweekly or monthly payments. The customer is put on a payment plan to pay the item off over time — but they can go home with the product on the first day, and use it immediately. 

For example, instead of buying a new refrigerator, a customer may be able to rent to own a new fridge. They may pay, for example, $25 per week for 80 weeks. 

For many people, that $25 per week is much more affordable than having to spend $1,000 or more to buy a new fridge upfront. 

Even more appealing, rent-to-own agreements often don’t require a credit check. This means that rent-to-own won’t affect your credit score. 

However, the long-term cost of rent-to-own will almost always be higher than buying. For example, $25 per week for 80 weeks would be a total of $2,000 — even though the fridge itself may only be $800 or $1,000 if you bought it outright. 

It’s called “rent” to own because until the customer fully pays off the item, they don’t own it. Most rent-to-own agreements allow the customer to return the item at any time. They won’t get a refund on what they’ve spent, but they won’t owe any additional payments. 

In other words, you’re renting the item from the place you buy it from. But once you’ve made a certain number of payments, you will own it outright and won’t have to pay any more. 

Note: “rent-to-own” can also refer to rent-to-own houses, but this article will focus on rent-to-own products like appliances and electronics. 

Rent-to-own pros and cons

There are both advantages and disadvantages to consider when it comes to rent-to-own appliances. 

Pros

• Allows you to take home and use items for a low weekly or monthly cost

• Doesn’t affect your credit score

• No credit check required in many cases

• May allow you to get higher-quality items than you could afford to buy outright

• You can generally return items if you decide not to keep them

Cons

• You will end up paying more than retail price

• There may be hidden fees or other costs

• Rent-to-own transactions don’t help you build credit

The biggest downside to consider is that a rent-to-own appliance is more expensive than actually buying the same item.

While the upfront costs are lower and you can pay a low weekly or monthly payment, when you do the math, rent to own costs a lot more than buying. 

The total cost of a rent-to-own appliance will often be two to three times more expensive than buying outright. For example, consider an oven that costs $500 to buy at a store. That same oven might cost you a total of $1,000 to $1,500 with a rent-to-own payment plan. 

When does rent-to-own make sense?

In most cases, a rent-to-own agreement isn’t a great deal. But there are two situations in which rent-to-own appliances might make financial sense:

When you want a short-term or medium-term rental

If you want a temporary upgrade for a few months, a rent-to-own agreement may make financial sense. You’ll pay the weekly or monthly rental cost and then return the item when you’re done with it. You won’t be refunded any of the money you spent (and there may be some fees), but this could be an option if you only need something for a short period of time.

When you have poor credit and truly need an item 

If you have bad credit, it can be hard to be approved for a credit card or personal loan. A rent-to-own agreement usually won’t require a credit check, so it doesn’t matter if you have poor credit. If you genuinely need an appliance for your home, and rent to own is your only option, it could make sense. However, make sure the item is a necessity. The financial burden of rent-to-own appliances is high, so it’s not worth it for unnecessary purchases. 

How to find rent-to-own appliances

Rent-to-own appliances are available from many rent-to-own retailers, including Rent-A-Center, Aarons and others. 

Traditional retailers are also starting to offer the service. For instance, Lowe’s Home Improvement now has a lease-to-own program. 

Alternatives to rent-to-own

As discussed in the rent-to-own pros and cons section above, these payment plans end up costing a lot more than it would cost to just buy the product upfront. But what if you can’t afford to buy it?

Here are some alternatives that are worth considering. 

Buy used 

You can often find inexpensive used items on Craigslist, Facebook Marketplace, OfferUp, and other local marketplaces. There are also used appliance stores in some cities. 

Buy refurbished

You can also get a good deal on a refurbished appliance. These are used appliances that have been repaired and refurbished, either by the manufacturer or by a skilled technician. 

Buy with layaway

Layaway is a different type of purchasing agreement where the buyer can put a deposit down on an item and pay it off over time. While interest is typically not charged on a layaway item, the downside is that the buyer can’t actually take the item home until they have fully paid off the purchase. 

Use a personal loan (maybe)

If you have good credit and can qualify for a personal loan, you could take out a small personal loan to cover the cost of the purchase and then pay it off over time. You’ll still have monthly payments and will still pay interest, but this will usually be cheaper than a rent-to-own deal. It may affect your credit, however. 

Use a credit card (maybe)

Even though credit cards charge high-interest rates, using a credit card may still be cheaper than a rent-to-own deal. The APRs on rent-to-own appliances can be upwards of 200%, compared to the average credit card interest rate of around 15%. However, using a credit card may affect your credit.

Important note: You should only buy an appliance using a personal loan or credit card if you are sure that you need the appliance and you plan to keep it. Unlike rent to own, you often can’t return an appliance if you purchase it outright. It’s important to be confident in your purchasing decision.

It’s also important to understand that credit card debt can cause a lot of financial problems long term. It’s very important to have a plan to pay off your credit card debt as soon as possible. 

Do you have existing credit card debt that you want to pay off? Tally† may be able to help. Tally is a credit card debt payoff app that helps qualifying applicants consolidate credit card debt and save money on interest.

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.