What is Rent-to-Own (RTO)?

The rent-to-own, or lease-purchase, industry is relatively new to the American economy. The unique “rent-to-own” transaction sprang up in the 1960’s in response to a growing consumer need for acquiring the use of household products without incurring debt or jeopardizing the family’s credit. The rental-purchase customer comes from all walks of life that desire consumer durable goods in their homes without the long-term financial obligations associated with credit sales.

What distinguishes rental-purchase from a retail credit sale is the term “rent.” There is no interest charged to consumers, no credit is needed, and customers can return the merchandise at any time. This no-obligation, no-debt feature is the cornerstone of rental-purchase. It’s easy, it’s safe and its hassle-free free replacement, repair and delivery are included.

RTO Transaction:

Rentals are normally established for payment periods of weekly, bi-weekly, semi-monthly, and monthly.

At the end of the week or month, the customer can either terminate the agreement without any cost or obligation, or renew the agreement by making another advance rental payment.

If the agreement is renewed a prescribed number of times (usually a total period of 18 months) and the customer meets the terms of the rental agreement, the store conveys ownership of the item to the customer.

At the onset of the agreement, the customer is told very clearly what that prescribed number of renewals is, and the total dollar amount in rental payments he or she will have made by the time ownership is an option.

Early Buy Out Option:

Every customer has the option to buy out each rental agreement early in order to take advantage of cash saving benefits towards ownership. The early buy out option may be exercised at any time during the term of the rental agreement.

RTO Facts: