Updated: Aug 14, 2025

Rent-to-own might sound like an easy way to get the furniture, electronics, or even a home you want—without paying everything upfront. But while these programs can be helpful in some situations, they also come with risks. It’s important to understand how they work before signing any agreement.

What Is Rent-to-Own?

Rent-to-own means you pay for something in small, regular payments over time—usually weekly or monthly—and you get to use the item right away. After you make all the payments, you own the item. Until then, you’re essentially renting it.

This model is often used for:

• Furniture and appliances

• Electronics like TVs, phones, and gaming systems

• Tires or car accessories

• Homes (in a different structure called lease-to-own)

These agreements are usually marketed toward people who need an item immediately but don’t have enough cash or credit to buy it upfront. While it may sound like a flexible solution, the total cost is often much higher than if you bought the item outright.

How Traditional Rent-to-Own Works

You pick out a product at a rent-to-own store or website, then agree to make regular payments for a set period. The company delivers the item to your home, and you can start using it right away. But you don’t technically own it until the last payment is made.

For example, let’s say you rent a $500 couch with a plan to pay $25 per week for 24 months. Over two years, you’ll pay $2,600—more than five times the original cost.

If you miss payments, the company can take the item back, and you may not get a refund for what you already paid. Some stores offer “same-as-cash” options—where you pay in full within 90 days and avoid interest—but only if you can come up with the cash in time.

Pros of Rent-to-Own

No credit check required
Rent-to-own companies usually don’t run a credit check, making it a popular option for people with poor or no credit history.

Immediate access
You can get what you need quickly without saving for months or waiting for approval. This is especially appealing for families who need a bed, refrigerator, or other essentials right away.

Flexible payments
Weekly or monthly payments may feel more manageable than saving up or qualifying for a loan. Some companies even let you return the item at any time if you no longer want it.

Potential to build ownership
If you make all the payments, you end up owning the item—unlike traditional rentals where you have to return it.

Cons of Rent-to-Own

High total cost
The biggest downside is the final price. You’ll often pay two to five times more than the item is worth. This makes it one of the most expensive ways to buy things.

No equity until the end
You don’t officially own the item until your last payment. If you miss one or need to return it, you may lose everything you’ve already paid.

Fees and penalties
Late fees, delivery fees, and early termination charges can add up. Some contracts also charge restocking fees if you cancel.

Aggressive collection tactics
Rent-to-own companies have been known to use frequent calls, home visits, and other tactics to recover unpaid items. In some cases, they can take you to court.

No benefit to early payoff (unless specified)
Unless your agreement includes a clear early payoff option, you may not save much—or anything—by paying off early.

Rent-to-Own Homes: How They Work

Rent-to-own housing is a different process that combines renting with an option to buy the home later. You sign a lease and pay monthly rent, but a portion of your rent may be set aside as a credit toward the home’s future purchase price.

There are two common types:

Lease-option – You rent the home for a set time (usually 1–3 years), and you have the option—but not the obligation—to buy it when the lease ends.

Lease-purchase – You agree upfront to buy the home at the end of the lease term, which makes it harder to back out if your situation changes.

These agreements usually require a non-refundable upfront fee (option fee) ranging from 1% to 5% of the home’s price. If you decide not to buy, that money is lost.

Rent-to-own homes are often marketed to buyers who can’t qualify for a mortgage today but expect their finances to improve. But like store-based rent-to-own, they come with risks.

Pros of Rent-to-Own Homes

Gives you time to build credit or save
You can live in the home while improving your finances or saving for a down payment.

Locks in a future price
In a rising housing market, agreeing to today’s price can be a benefit—if values go up.

Part of your rent may go toward purchase
Some contracts credit a portion of your rent toward the final price, helping you build equity.

Less competition
Since not everyone wants or qualifies for rent-to-own homes, you may have an easier time finding one.

Cons of Rent-to-Own Homes

Higher rent and upfront fees
You’ll often pay above-market rent, and the option fee is usually non-refundable—even if you don’t buy the home later.

No guarantee of mortgage approval
If you still can’t qualify for a mortgage at the end of the lease, you may lose the house and all the extra money you’ve put in.

You’re still a tenant
Until you buy the home, the landlord can still evict you for lease violations or missed payments.

Home maintenance may fall on you
Some contracts require you to handle repairs—even though you don’t officially own the house yet.

Shady contracts
Not all rent-to-own offers are fair. Some landlords use confusing language or add extra fees. Always read the fine print and consider talking to a housing counselor or attorney before signing anything.

Alternatives to Rent-to-Own

If you’re considering rent-to-own because you’re short on cash or credit, you might have other options:

• Buy used – Thrift stores, yard sales, and online marketplaces often have quality items for a fraction of the price.

• Layaway – Some stores offer layaway, where you make payments and receive the item after it’s paid in full—without interest.

• 0% financing – Some retailers offer interest-free payment plans if you qualify, which can be cheaper than rent-to-own.

• Credit-building cards or loans – If you’re trying to rebuild credit, look into secured credit cards or credit-builder loans from a credit union.

• Save slowly – It might take longer, but saving even a little each week can help you avoid debt and high fees.

Final Thoughts

Rent-to-own programs can offer fast solutions—but they often come with a high price. Before signing up, compare the total cost, understand the risks, and explore other options. If you’re going to pay more over time, make sure you’re doing it for the right reasons—and with eyes wide open. Being informed is the best way to protect your money and make decisions that truly help your financial future.