Rent-to-own stores allow you to walk in, select an item (or items) to rent, and take them home that day with a plan to make weekly payments to the business for as long as you want to rent the item or until you pay off its full (adjusted by the rent-to-own business) value. They are an alternative to a typical store that wants payment (either from you or from your credit card company) up front. In this activity, you will explore the cost of Rent-to-Own using the info below and a credit card calculator.

Part I: Review the Data

Consumer Reports put together this chart of sample rent-to-own payments. Review the data:

Part II: What are the Alternatives?

Let's assume you want the Whirlpool washing machine and dryer because you're moving into a new apartment and don't want to use the laundromat. WhenConsumer Reports created the chart, the same washing machine and dryer cost $966 to buy from the store.

1. Assume you take the same $19.99 you'd pay weekly at Rent-to-Own and saved that much weekly, in a piggy bank at home, instead.
   1. How many weeks would it take you to save up and purchase the washer/dryer in cash?

1. How much money would you save by using this save first method to purchase the washer/dryer instead of going to Rent-to-Own?

1. What might be a downside to using this "save first" method to pay for your washer/dryer?

1. Assume you want to buy the washer/dryer immediately from a normal store using a credit card. The $966 price becomes yourcurrent balance. The best credit card you can qualify for has an extremely highinterest rate (APR) of 29%.

1. If you can afford the same weekly payments that you'd owe to Rent-to-Own ($19.99), how much would yourdesired monthly payment be (round up to the nearest dollar)?

1. Input thecurrent balance,APR, andmonthly payment into thecredit card calculator. Forcredit card issuer, select "Other." How manymonths would it take you to pay off the credit card bill?

1. Because we want to compare with Rent-a-Center, who measures payments in weeks, how manyweeks would it take you to pay off the credit card bill, assuming 4 weeks in a month?

1. What would be your total cost of the washer/dryer, including principal (initial price of purchasing the washer/dryer from the store) and interest payments (given by the credit card calculator)?

1. How much money would you save by using a credit card to purchase the washer/dryer instead of going to Rent-to-Own?

1. What might be a downside to using this method to pay for your washer/dryer?

Part III: Sum It Up

1. What's the most cost effective way to purchase the Whirlpool washer/dryer?

1. Write 3 scenarios in which someone might choose a more expensive method of purchasing the washer/dryer instead of the most cost effective strategy.

1. What advice would you give someone who is considering using Rent-to-Own?