Rent to Own - What a deal! (for the rentee)!

[Ottawa]

This is awesome!   Naturally, these folks would be better off not buying the item they can't afford.  Instead, however, they are content to pay 2 times the price and more by renting to own!  These have to be the same type of people that think payday loans and car financing are a deal. 

http://money.cnn.com/2013/11/07/pf/rent-to-own/index.html?iid=HP_River

[Recon]

This really struck me as a Mustachian way of thinking about high-APR financing - and financing in general - that should be painfully obvious to everybody here, but really doesn't hit home (no facepunch pun intended) for paycheck-to-paycheck people:

"These companies are serving poor communities, and the problem is when you're poor, the last thing you should be doing is opting for one of most expensive ways to buy something," he said.

[MrsPete]

I don't think it's fair to say they're "content to pay" this amount.  Rather, they're entirely ignorant of the fact that they're doing it because they don't bother to do the math. 

I remember seeing an ad for one of these places when I was a freshman in college, and it sounded pretty good!  When I visited the store, I figured out quickly that it wasn't a good deal at all.

[MoneyCat]

As someone who escaped from poverty, I can explain the mindset of people who rent-to-own.  Poor people are ashamed to be poor, because our society says the reason they aren't rich is because they are lazy and worthless.  So, to project the image that they are wealthier in an attempt to improve their social standing, they make purchases that they cannot afford or that just look silly.  Rent-to-Own seems attractive to them, because they can have the same furniture, electronics, etc. as middle class people, instead of having KMart/Walmart garbage instead.  They probably can't purchase these items with a credit card, because they either have no credit due to low income or fear of banks (who drain their accounts with NSF charges) or they ruined their credit because they couldn't make payments on time due to low income, so they end up paying 200% markups on everything.

Rent-to-Own preys on people who are desperate, just like check cashing places or payday loansharks.  Poor people want so desperately to escape from the humiliation of being poor that they dig themselves deeper into poverty with this kind of stuff.

The solution, of course, is to take up a Mustachian anti-materialist lifestyle.  I have been trying to evangelize my relatives who are still mired in poverty by sharing this website with them, along with other personal finance sites.  I have had mixed results so far.