Find the total cost of a rent-to-own plan versus cash price.
Rent-to-own agreements quote a small weekly payment and rarely the total. Multiplying the payment by its frequency and the term gives what you will actually hand over, and subtracting the cash price exposes the premium. Annualising that premium as a growth rate converts it into something comparable with a loan or card rate, which is usually where the true cost becomes obvious.
Rent-to-own total cost
Total paid = payment x payments per month x term months; implied annual cost = ((total paid / cash price)^(12/term months) - 1) x 100
Rent-to-own and hire-purchase agreements are consumer credit products with legal consequences, including repossession, if payments stop. Terms and disclosure requirements vary by jurisdiction. This is an arithmetic comparison, not financial or legal advice.
The premium bundles credit, insurance and the risk of non-payment into a payment small enough to feel affordable. Totalling the payments is the only way to see it.
Many agreements allow an early purchase option at a reduced figure. Ask for it in writing, because it can cut the premium substantially.
A used item bought outright, a layaway plan, or a credit union loan will almost always cost less than the implied rate shown here.