PLEASE PROVIDE A FULL EXPLANATION MINIMUM 350 WORDS

Before it went out of business, Kmart offered a Lease-to-Own program targeted to low-income consumers and was taking some heat over it. Rent-to-own is not newchains such as Aarons and Rent-A-Center have been around for yearsbut it is new that a mainstream retailer has moved into this market. Kmarts parent corporation, Sears Holdings, launched a similar program, and according to a company executive, it is satisfying the unmet needs of new customers. Some critics say that it is just encouraging instant gratification and exploiting disadvantaged consumers. These types of customers dont qualify for credit and dont have enough cash to purchase desired products outright, such as televisions and other big-ticket items. However, a $300 TV purchased through Kmarts program ends up costing consumers $415 if purchased at the end of the lease. If customers make just minimum payments over the course of the lease, one expert calculated, that it is equivalent to charging a 117 percent annual interest rate. Sears spokespeople defend their service as being better for consumers compared to other rent-to-own options because the retailer does not markup the price of the product beyond the normal retail markup and limits the lease period to 18 months, whereas other national rental chains prices are much higher and leases can run two to four years.

Are Sears and Kmart exploiting disadvantaged consumers? Explain why or why not. PLEASE USE EXAMPLES