Are rent to own laptops agreements really worth it?
In times of financial distress or if you have a tight budget but still need (I mean you are obliged) to get a laptop for work or school, you might be considering one of those rent to own laptops agreements offered on the web.
Before you jump in and press “Rent”, let’s see what are the pros and cons and see if these agreements are really worth it. I’ll also explore other alternatives that could be more profitable than entering in a rent to own agreement.
After all, a penny saved is two pennies earned and it’s with money that we make money! And as a dividend growth investor seeking early retirement, saving or avoiding unnecessary expenses is slowly becoming a second nature for me because I need to save a lot in order to invest my excess capital to free myself from the chains of a 9@5 job but also because it will be much easier to retire on less if I can live on less.
What is “rent to own”?
Rent to own agreements are not new. It’s an idea that started in the early 1900 in Europe to offer more flexibility to customers. It was called “hire purchase” when it first started.
A rent to own agreement is simply a way of getting a product that you can’t afford upfront or that you want to try out before buying by the use of an intermediate.
The rent to own company buys the good and rent it to you until you own it or until you are tired of the good. For sure, they make a profit… it’s business. They take all the risk.
Pros of the rent to own laptops agreements
1. You’ll get a brand new laptop without having to cash out a lot of money
Cashing out 400$ or more might not be an option for you. Yet, you desperately need a laptop. Most rent to own laptops company like Rent A center will let you start with 0$ down! So you’ll get the laptop right away on day 1 and then pay monthly or bi-monthly until you’re done.
2. Great for short-term tasks or projects that you need your team to handle
Let’s say you have a school project or a small business project that needs laptops, you don’t want to buy many laptops that will stay unused after the project is done. Renting can then be an option.
3. Can be an option for people with bad credit
Rent to own companies usually only ask for a proof of income and some references. They often claim that your are “auto-approved”. So, even if you have a bad credit, it could be possible for you to get the laptop you need or even the one of your dreams.
4. You want to play a great game that needs a powerful laptop for a couple of weeks or months?
Let’s say that your usual needs are for a very basic laptop but recently, your friends came up with a new cool game that needs a powerful laptop. You know that you won’t play with that game forever. Why not rent a gamer’s laptop then? You’ll use it as long as you need it and then return it. The savings can be worth it.
5. You can stop payments whenever you want and return the merchandise
With most companies like Rent A center, you can take a break of payments whenever you want. You can return your item. You can lease it again after… It is quite flexible for someone with a tight budget.
6. They offer a wide variety of brands
Most rent to own companies I came across offered a large variety of choices and brands all in the same place. This can be very convenient if you want to try out one or several brands or models or buy a laptop on a per month basis from a company who does not offer a pay-per-month plan.
7. You can upgrade to a newer model at anytime
Most rent to own companies let you return your item at any time. You can then start a new rent to own agreement for a newer laptop.
There are a lot of PROs as you can see. It’s cool and convenient. They don’t check your credit. You can stop a payment at anytime (with most companies). They offer very flexible payment options on 12, 24, 36 months or more. You can pay monthly, bi-monthly, you can settle and pay in full at any time. You can get a wide variety of brands and models and make very low payments to get them even if those companies usually don’t offer monthly payment plans. You can upgrade for a better one at any time. Some will deliver it right to your door for free… I could list many more. It’s just a wow!
Now let’s see what are the cons.
Cons of the rent to own laptops offers
1. They carry high interest rates
If it’s too good to be true then it’s too good to be true!
If you calculate well, you’ll see that your laptop is going to cost you a leg and an arm, most probably at least two to three times its real cost if you would have bought it in full at first from the retailer.
2. You’ll need insurance
Rent to own means you don’t own it until you own it. So if it gets stolen, if you break it, if it gets destroyed by water damage or fire or if you drop it, then you’ll have to replace it… It’s not yours yet! Rent to own companies might sell you insurance or put some waivers on act of gods but you’ll need insurance.
Your home insurance contract might cover you, but you’ll have to verify with them. They might have limitations or exclusions.
3. Repair costs
Most rent to own companies out there will provide some assistance for repairs (at extra costs) but some don’t. Anyhow a broken laptop will cost you
4. Be careful of fine prints
Some rent to own companies will prey upon you and can trigger higher interest rates or fees on several occasions that you misunderstood or were not explained. Be sure to read the entire contract and ask for precisions to a lawyer if needed (hint : many house insurance companies offer free phone advice nowadays or you could call the consumer protection agency.)
5. You could get spied on
In what world do we live in?!
They don’t check your credit, so for sure they might have to handle bad payers. This does not give them the right to spy you on, but some did anyways. They used pre-installed softwares to geolocalise people, take pictures of them, get access to their email and so on… It was in the news! Read it here.
Be sure to do business with trustworthy people.
What are your real needs? No I’m not talking about your desires. We all dream of getting the coolest laptop ever with tons of rams a big 3D video card and fast CPU. But… is it only to go on Facebook, Google, play some games, write some stuff, watch YouTube or Blu Rays, listen to music…
Then you don’t need the last most expensive laptop. I have an old HP laptop that my brother’s wife bought in 2007. And you know what? I works just great. She gave it to me when she bought her new bomb! I’m paying my bills, writing emails, managing my blogs and my finance with that laptop right now. It’s just a great used 7 years old laptop.
I saw her for Christmas and she told me that she missed her laptop. It had a bigger screen and the keyboard was more ergonomic… ah well! It’s mine now!
Before buying why don’t you check around you? We live in a society of consumerism. People throw things that still work because they want to upgrade. Chances are one of your relatives has an old spare laptop taking the dust.
That’s what I did and she gave it to me instead. I’m very happy with the results. I own my laptop since 2011 and wouldn’t change it until it breaks. By the time it happens, my mom and dad will probably want to upgrade theirs!! ahah
Some schools and employers also have put in place programs to help you borrow laptops on a daily basis of for a couple of days at a time. If your needs are punctual, this could be an interesting free option!
Finance it with your school program
If your school is forcing you to get a laptop, then chances are that they offer a plan and some discounts or interest free financing. Before buying from elsewhere, verify with them. You might get a good deal.
Buy a used laptop
Used does not mean scrap. You could buy a good refurbished laptop for 50$ on Craigslist, Ebay or even in your hometown’s shops. Just take the time to consider that option. If you can make 2 or 3 years or more like me on a used laptop I’m sure you won’t regret it.
Technology is improving fast but needs are not improving at the same rate. You don’t need the fastest CPU ever to chat with your friends, draw or store pictures.
Buy a new laptop on a per month plan with Dell
Dell offers competitive products. I bought several times from them and have always been totally happy with their service.
As an example, I just saw that the Dell Chrome book sells for as low as 15$ per month or 279$ or if you prefer a good old style laptop, they have the Latitude 15 3000 series also starting as low as 15$ per month.
This is for a brand new laptop… Your own brand new laptop!
But interests rate will most probably be high there too… Dell often offers discounts so make sure to check often.
While I vastly prefer saving the money and then buying in cash, I recognize that there are also times when our choices are limited. If it was my case I would try to borrow money from my parents or on my personal margin and buy a used laptop or a brand new laptop or at a very affordable price depending on my true needs and not based on my desires.
Rent to own agreements usually cary very high interest rates and a lot of other fees. While they appear as offering many pros and can also be interesting for answering special needs in some occasions, I don’t feel they are a great option. Plus, they may encourage over-spending as they let you buy easily something that you can’t really afford.
In the end, I think that there are so many other options to consider before entering into a rent to own agreement that someone can explore to respect his buying capacity.
But this is just my two-cents.
Any thoughts on the subject?
Full disclosure : I do not own any interests in Dell or any other rent to own companies named here as of writing this post. This situation could eventually change. Have a look at my portfolio here.
Rent a Center and Dell are trademarks who are owned by their respective owners
Image courtesy of Stuart Miles / FreeDigitalPhotos.net