Rent-to-own

Rent to own (RTO) is a means of acquiring ownership over time without taking on debt. RTO companies rent items, most typically furniture, appliances and electronics, with the condition that the item will be owned by the renter if the term of rent is completed. Since rent to own stores do not require a credit check or down payment, they are popular with sub-prime-credit consumers; those with damaged or no credit history. RTO is also popular with corporate travelers on temporary assignment as there is no long term commitment involved; An item can be rented and returned at any time without penalty.

RTO is a lease, as opposed to a credit sale, so no interest is charged.

Industry-wide, 75% of all RTO transactions are weekly; the consumer agrees to pay a weekly amount for leasing property. The remaining 25% of agreements are biweekly and monthly. RTO agreements are generally written for a 12, 18, or 24 month term. If the consumer rents the merchandise for the full term, ownership is acquired. Most RTO transactions include an early buyout clause that allows the consumer to purchase the merchandise at any time during the term for 50% of the remaining rental payments.

A consumer may return a rental item at any time without penalty. Most companies have a lifetime reinstatement clause, allowing the consumer to re-rent a returned item (or similar item) and receive full credit for all previous rental payments made.

The top 3 RTO companies in North America are;

• Rent-A-Center (Recently acquired Rent Way)
• Aaron's Sales and Lease Ownership
• easyhome (Canada)

The primary portal for the rent to own industry is RTO Online