How to read and understand Lease-to-Own or Rent-to-Own contracts

Most of the No Credit Needed “financing” available at the retailers are not loans, but Lease-to-Own ( or Rent-to-Own) contracts.  

These agreements come with specific terms that outline how much you'll ultimately pay for the merchandise you're acquiring.  

Let's dive into an example with one of the largest companies offering this kind of arrangement. 

Example: Progressive Leasing  
(Rental Fee, Initial Payment Amount, and Early Buyout Option will differ by retailer and the State you live in) 

  1. Cash Price – what you would pay at the store with cash 
  2. Cost of Rental - the rental fee charged in addition to the Cash Price
  3. Total Payment - the total amount paid over 12 months
  4. Initial Payment - amount due when you sign the contract at the store to cover the rental period up to your first payment date
  5. Amount of Each Payment - amount debited from your account based on the agreed payment plan (weekly, twice a week, twice a month, or monthly) 
  6. Number of payments - total number of payments and the initial payment
  7. Rental period - term of the lease, the most common is 12 months  

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So, what are you paying for this merchandise? 

  • Compared to paying in cash at the store (pre-tax) 
    • Pay in 12 months, you will pay $3,486.50 more for a total of $6,236.50
    • Pay within 90 days, you will pay $49 more for a total of $2,799
      Early Purchase Options: You can exercise an early purchase option by purchasing the property at any time during the first 90 days after the property is delivered to you by paying us the "90-Day Purchase Option" amount plus tax and any Returned Payment Fees, with credit for all payments you have made. The 90-Day Purchase Option amount is $2,799.00. To purchase early call (877) 898-1970."
    • Pay at 6th month, you will pay $2,724 more for a total of $5,475.
      "You can also purchase the Property at any time by paying us an amount equal to any payment then due (including Returned Payment Fees), plus the "Early Buyout Option" amount, which is 65% of the unpaid Recurring Payments"

Quick Math

  • Pay withing 90 days and pay $49 more than Cash Price - BEST OPTION!
  • Pay after 90 days to 6 months, and your total cost will be 1.75 to 2 times Cash Price
  • Pay in 12 months and your total cost will be 2.25 times of Cash Price
  • A comparable 12-month loan will have approximately 190% APR interest rate


Fine print to keep in mind and avoid pitfalls? 

  1. Initial Payment amount can vary by retailer
  2. 90-Day Early Buyout Offer countdown may differ by company 
    Confirm the exact date!
  3. Some companies may require you to call them to exercise your 90-Day Early Buyout Option
  4. Some companies will no longer offer 90-Day Early Buyout Option if you missed or are late on any payment
  5. 90-Day Early Buyout Option price may include additional markup and fee
  6. Know what you will be paying if you cannot pay off in 90 days. The amount to Buyout your lease after 90 days will surprise you


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