Secured installment loans or rent-to-own?

There are important differences between secured installment loans and rent-to-own services:

  • Secured installment loans are repaid in equal monthly amounts for an agreed period. The collateral used to guarantee the loan is the item you purchased with the loan. You are able to use the item you purchased while you are paying down the loan.
  • Rent-to-own is a rental agreement that allows you to apply rent payments to the purchase price. You are not required to purchase the item. If you do decide to purchase the item, the store sets up a plan whereby you rent the item until it is paid off. The store remains the legal owner of the item until you make the final payment. If a payment is missed, the store may repossess the item from you and you will be left with nothing. 

Installment loans charge interest and you are able to evaluate one to another by comparing APRs. Rent-to-own agreements are NOT loans, so no interest is charged, but other fees may be. Often by the time you own the item you will have paid much more than if you had originally purchased in cash.