FIGHT BACK! BY DAVID HOROWITZ
         The High Price of Renting to Own

        Rental purchase of home appliances and furniture may seem like an easy way  to furnish a 
home or apartment. Renters, however, pay a huge premium for that  convenience. A study done 
in California recently showed that people who rent to own  pay as much as five times the normal 
purchase price for the items they buy.
        The California Public Interest Research Group (CALPIRG) has done a number  of surveys on 
rental dealers in that state and found that those low weekly rental  payments often add up to 
significant overcharges on all kinds of home furnishings.  Rent-to-own contracts may carry an 
implied annual interest rate of more than 100  percent, compared to interest rates of around 18 
percent on credit card purchases and  21 percent on some department store charge cards.
        As an example, CALPIRG found the total cost of a 19-inch Zenith TV set from  one rent to 
own company was $961.26 when paid off over 78 weeks. That's $607.93  for the TV itself and 
$353.33 in rental charges. The same set was sold at a local  discount electronic store for $249.
        And it's all quite legal. In most states, there are no legal limits on how much  dealers can 
charge for new or used appliances. Nor are there any laws requiring  dealers to disclose the total 
long-term purchase price or rental fees. According to  CALPIRG's Jeffrey Francis, "These stores 
use enticing come-ons to encourage people  to fill their homes with new items, furniture, TV's, 
appliances -- all at low weekly  payments. But, when you sit down and add these figures up, they 
come out to huge  profits."
        Many rent-to-own contracts also allow the seller to repossess rental items if only  one 
payment is missed. That means the renters may lose whatever equity they've paid  in, even if the 
item was nearly paid off.
        Nor are renters always told whether the items they are paying for are new or  used. 
"Consumers are often sold used items, rather than being able to purchase a  much cheaper new 
item at a store," says Francis. "Sometimes that information is made  clear, and sometimes it is 
not."
        Rent-to-own companies say they're getting a bad rap from CALPIRG and other  consumer 
organizations. They say comparing their prices with department store prices  doesn't take into 
account the additional costs of financing, delivery and extended  warranties. When those are 
factored into the comparison, the price difference narrows  -- somewhat.
        Dealers I've spoken to insist they are reputable business people who are  offering a needed 
service to families who simply do not have the cash or credit to  make such purchases from 
conventional retailers. They also point out that prices and  terms vary tremendously among 
individual dealers, and that rental buyers should  definitely shop around for the best deal.
        They might do even better shopping the used-appliance and used-furniture  outlets and 
want ads for home furnishings and appliances. "Such items are usually  available at a very low 
price," advises Francis, "often no more than a couple of weeks'  payments on some rent to own 
merchandise."
        If you have any questions or comments, please write to David Horowitz in the  Consumer 
Forum+ (go FIGHTBACK). COPYRIGHT 1995 CREATORS SYNDICATE, INC.