The rent-to-own industry is a multi-billion dollar industry that attracts consumers with the promise of taking quick possession on "big-ticket" items, like furniture, appliances, computers and electronics (TVs, DVD players, stereos, etc.) with no down payment, no credit check and often no upfront cash required. There are a variety of reasons that more than 3 million Americans use rent-to-own stores every year:

• Some consumers only want to use an item for a short period of time so they prefer to rent rather than buy (i.e. people who have moved and need furniture until their items arrive)
• Some consumers do not have enough cash saved to make the full payment amount and do not want to either wait to accumulate enough savings or to put it on their credit card
• Some consumers do not have access to credit (i.e. to obtain a credit card, a loan or another form of money to make the purchase)

One of the most attractive selling points that rent-to-own stores tout is that you do not need a credit card, nor will the store run a credit check on you, in order for you to rent an item. That's important since the rent-to-own industry targets mostly lower-income consumers who are not as likely to have the cash or credit available to make those purchases. In fact, the Federal Trade Commission's (FTC) national survey found that less than half of all rent-to-own customers have a credit card (44%) and nearly one-quarter (23%) of all rent-to-own customers have no credit card, checking or savings account. The FTC survey revealed that "compared to households who had not used rent-to-own transactions, rent-to-own customers were more likely to be African-American, younger, less educated, have lower incomes, have children in the household, rent their residence, live in the South and live in non-suburban areas."

With rent-to-own stores you pay to rent an item according to the terms of a payment plan. Some stores allow you to choose from a variety of payment plan options - weekly, bi-weekly, monthly, etc. - while others offer only one plan. You agree to an automatically renewing lease - that means that the lease will renew every term (week or month) and, unless you cancel the lease, you will have to make the required payment. Most rent-to-own stores will allow you to cancel the lease agreement and return the item at any time but you still have to pay the current full due amount for that period of the lease (i.e. that week or month's payment is due in full even if you returned it before the end of that period). However, if you want, you can purchase the item outright in two ways:

1. make all of the required lease payments or
2. pay the remaining cost of the item after deducting what you have already paid in rental fees.

If you are considering rent-to-own, you first want to know what the price of the item is - meaning both what other stores are selling it for and how much you will have paid for the item in full after making the required lease payments on it. Rent-to-own stores' pricing and their pricing labels can be confusing. You, as the renter/buyer, must do some homework to figure out exactly how much you will have pay for an item after totaling up the rental fees over the life of the lease term.

The Center for Responsive Law cites an example comparing the price of purchasing a TV set using store credit versus through a rent-to-own store. If you were going to "rent-to-own" a $250 television set for a "low $13 a week" lease, over a 78 week period you would have paid $1,014 for a $250 TV set. In comparison, if you were paying on credit the APR (annual percentage rate) for that TV would be 265%. In another comparison, if you purchased that same $250 TV set using a department store credit card with an APR of 19.8% interest and paid the minimum amount due for 18 months, you would pay $291.06 or $723 less than if you had bought the set using the rent-to-own store lease.

According to the FTC's survey, 19% of rent-to-own customers were dissatisfied with their experience, and most cited pricing as the reason. Complaints about high prices were made by 27% of all rent-to-own customers, including nearly 70 percent of dissatisfied customers.

Whether you are considering rent-to-own as a way to take possession now of an item that you plan on purchasing outright or if you are simply planning to rent an item, be sure to ask your salesperson the following questions:

• What is the lease term?
• Does the lease automatically renew each period (i.e. week or month)?
• What would be the total price for this item if I bought it after making all of my lease payments?
• How do I break the lease if I decide I no longer want to rent the item?
• Is there any penalty for breaking the lease (a prepayment penalty) or for deciding that I want to pay the full amount before the lease ends?
• What happens if I can't make my full payment each pay period? Would I be charged a fine or late fee?
• Under what conditions could this item be repossessed?
• How do I get the item repaired if it breaks or malfunctions while I am renting it?
• Would I be renting and/or purchasing a new or previously-rented item?

Keep in mind that you may have other options than using a rent-to-own store including:

• Shopping online or comparison shopping at various local stores to get the best possible price
• Borrowing the item from a family member or friend. Be sure to have an agreement about when you will give it back, and in what shape, and if your family member or friend expects anything else. In some cases you and a family member or friend may be able to find a way to jointly purchase an item and share its use.
• If you can't borrow the item, or find a suitable alternative, enlist your family or friends in helping you find what you need at a price you can afford. Let your colleagues at work, school, place of worship, school or library know you are looking and see if they have any suggestions.
• Finding the item "gently used" at a second hand store, flea market or "For Sale" section of your local paper, community or work bulletin board postings
• Waiting to accumulate enough savings to purchase the item
• Seeing if a local store will allow you to make a down-payment and then pay the remaining balance on lay-away
• Checking to see if you could qualify for a short-term personal loan through your bank or credit union