It seems that places like RentaCenter, Aaron's, and a host of others are growing in a competitive environment: going after folks with little or no credit. Want to replace that sagging, ratty couch? No problem; you're approved. You can buy that replacement set outright for $1500, but if that's out of your reach, you just make convenient weekly payments. Total price for that $1500 set over two years (at which time, you own it): just a little over $4100.
What a deal! And if you have no credit, no bank account - well, that's how you that couch, or that bed, or that refrigerator to replace the one that just crapped out on you. Of course, a lot of times, people guess wrong, and that weekly payment never materializes. Well, hey, you're out the money you've been putting in, but on the plus side, your credit isn't dinged because - well, you don't have any credit to ding; besides, you're just renting.
Most falter. At the Buddy’s in Cullman, some 75 percent of items are returned or repossessed within weeks of the transaction, store manager Angela Shutt says.
If it seems like they're targeting folks just like the "payday loan" shops did, that's because they are. So, given that the payday scams have been largely shut down, how do these shops skate on charging such absurdly high interest rates?
That's easy: they're not charging interest; they're charging absurdly high rents. So while ordinary folks might be able to buy that $1500 couch set in three or four monthly payments, these rackets don't go that route. You may be able to go to BedMart and buy a new bed "one-year, interest-free, same as cash" - but that's because you have access to credit.
Of course, it's not as though these folks are innocent victims; they often make amazingly bad decisions: they decide that they "need" cell phones rather than sticking with a landline, among others. WalMart sells couch sets; maybe they could have waited until the holiday season, when the stores start offering layaway options.
Still, as with the payday scams, once they hook someone, it's hard to get out from under.