We’ve all seen adverts promoting ‘Rent to Buy’ or ‘Rent to Own’ arrangements, where customers rent a product for a number of years before being given the option to buy or keep that product, but our latest report, The Hidden Cost of ‘Rent to Own’, shows just how expensive these contracts can be.
They can look reasonable at first glance because the adverts focus on the weekly price. But when you consider that the contract is often for three years (around 156 payments), the total cost of the product hits home.
Unfortunately, the overall cost of the lease is often not disclosed, and advertising the weekly rate leaves an unrealistic sense about the cost of their contract. We believe that, in the interest of an effective and competitive market, these companies should disclose the overall cost as well as an imputed rate of interest to show the cost of credit. Terms of contracts should be in plain and simple language we can all understand. This would help consumers make an informed decision about whether this is the right deal for them.
Understanding phone contracts became much clearer once phone providers were required to include the minimum contract cost in their adverts. Consumer Action believes requiring Rent to Own companies to meet the same level of disclosure is a simple way to help consumers and promotes a fair and competitive market.