Sonia, Rent-a-Center’s Public & Community Affairs person, popular post, “How Predatory Lending Works, From Payday Loans To Rent-To-Own” and has a rebuttal that shows how they do math. I showed it to Jess, the creator of the infographic, and he has a rebuttal to the rebuttal. Let the chips fall where they may:
Sonia writes:
The graphic shows Rent-A-Center selling a mattress for $1000 at 90 days Same as Cash but we don’t carry a mattress that costs $1000 at 90 days. In fact, a customer can walk in our stores today and acquire a brand new queen-sized mattress at 90 days for $467. (Even if you were to use their example, a good FYI is that $500 wholesale cost on a mattress going at $1000 retail is not uncommon in the retail world as furniture generally has a 2 to 3x mark up for suggested retail pricing.)
Since some people don’t have $467 on hand, yes, we break the cost up into weekly payments like the graphic shows, but we don’t have any mattress that would have a 104 week agreement. Our longest weekly mattress term is 65 weeks, and 12 months is a lot more common and even then, people can pay off earlier to pay less.
And customers being locked into agreements? No way! And since customers can stop their rental at any time, that means if they have a change of circumstance, they can return the item and stop making payments. If they want to pick the rental back up in the future, they pick up payments where they left off. They don’t lose what they paid in.
The graphic says that customers have to pay sales tax on the higher price? No, like all businesses, we charge tax only on what a customer pays. If they pay $467 at 90 days, they pay tax on $467.
And insurance…well, many of our customers who don’t have existing insurance opt for our liability damage waiver so that if the rented item is stolen or damaged by flood or fire, they don’t have to keep paying rent on something they no longer own. We don’t require any customer purchase the waiver.
I shared Sonia’s email with the graphic’s designer. He rebuts:
Ben,
Thanks for the fwd. The mattress example was taken directly from a former Rentacenter manager.
I just called my local rent-a-center and asked how much the Serta Grand Choice Queen mattress was which is advertised on the RAC site. They told me it was $19.95 a week for 104 weeks. Due the math, its $2,074 plus all the extras. So I am not sure what fine point the RAC is trying to convey here as they are either giving false info, or are not in tune with their retail location policies.
The locked-in thing is splitting hairs. Sure, if you don’t make payments they will come and repo your mattress. You either pay it off in full, or lose everything you paid in.
As for the tax, if you pay off your matress at the 90 day price, yes its only $467, if you pay if off weekly its $2,074 and you pay the tax on what the price is. The problem is, when they sell you a $467 mattress, I doubt they mention that the taxes could be $150 if they opt to string the payments along.
If anything, I think I took it easy on RAC, which offers all the services in the graphic. Not only Rent-to-own schemes, but cash advances, payday loans, check cashing, pre-paid visa cards, money orders, and just about any financial service that allows people in need to part with their money.
Credit to Sonia and Rent-A-Center for engaging in the discussion, but I think I’ll still pass on renting my bureaus from them.
PREVIOUSLY: How Predatory Lending Works, From Payday Loans To Rent-To-Own
Why is there so much money in the buys? 
