Insider's Guide to Furniture & the Home Furnishings Industry

Jeff Frank is a 40 year veteran of the furniture industry who is happy to answer your questions about furniture! Ask your question today!

Any content, trademark’s, or other material that might be found on the SimplicitySofas.com website that is not SimplicitySofas.com’s property remains the copyright of its respective owner/s. In no way does SimplicitySofas.com claim ownership or responsibility for such items, and you should seek legal consent for any use of such materials from its owner.

Is Rent to Own Furniture Sturdier than Normal furniture?

Friday, November 16, 2018

Comments: 0

Is Rent to Own Furniture Sturdier than Normal furniture?

A reader has suggested that Rent-to-Own furniture should be the best place to buy furniture to hold up forever. His theory is that it must be sturdy since it has to survive people who can just trade it in if it breaks.

The logical reasoning behind that statement is completely wrong for Rent-to-Own furniture.

Rent_A_Center.JPG

Rent to Own (RTO) companies generally buy inexpensive low quality furniture. It is then marked up to an extremely high retail price and leased for "low" monthly payments.

The “rental” term typically lasts 12 - 24 months. The actual cost of the furniture will be recovered within just a few months.

The terminology “rental” is in quotes because these payments are not really rent. They are lease payments.

The bulk of the lease payments are finance charges. The interest rates are extremely high, far above those charged by credit cards.

Here is an example taken from another article. It shows comparable pricing on a 40" LCD TV in a Rent-to-Own store.

Buy it Now Price: $1,199.99
Rent-to-Own Price: $1,919.76 (monthly payments)
Interest Rate: 60%
Lowest Price Found for Same Product (new): $499.00
If the numbers shown above were for furniture, the total cost (from the manufacturer) would probably be $250 - $300. That cost would be recovered after only a very few payments.

Most furniture returns in RTO are due to unpaid monthly charges rather than damage. Returned furniture has very little resale value.

Liquidation firms pay a fraction of the original cost for this used furniture.It is not supposed to be re-sold to the store's customers.

Rent to rent furniture companies operate clearance centers. These clearance centers sell off used furniture that is no longer in condition to be rented, but is still usable. A substantial percentage of the furniture's cost may be recovered.

Rent to Own furniture stores should be avoided for most people. For people who do not have cash on hand and do not have access to credit, however, they may be the only option.

Since no background check or credit report is required, a large percentage of Rent-to-Own customers are high credit risks.

This makes the Rent-to-Own companies particularly vulnerable to the condition of the economy.

Economic downturns can severely impact the profitability of Rent to Own companies. High unemployment, recessions, inflation and high interest rates negatively affect RTO companies.

For additional information on this topic check out //Can You Actually Rent Furniture at Rent-a-Center Stores?//

This article can be found on the Simplicity Sofas blog //The Insider’s Guide to Furniture and the Home Furnishings Industry//.

Rent to Rent furniture is significantly more durable than Rent to Own. This furniture may need to hold up for use over several years by many different customers. These customers can return (or exchange) damaged furniture upon demand.

Rent-to-Rent (RTR) furniture, has to hold up for use over several years by many different customers.

Cort and Brooks are two major Rent to Rent furniture companies. Their customers are primarily business people who have temporarily relocated.

Comments RSS feed for comments on this page

There are no comments yet. Be the first to add a comment by using the form below.

Search