Renting furniture in Canada has become a major trend. The option to pay monthly for furniture, rather than having to shell out the total price all at once leads many to believe that this is a great option. After all, why dip into your savings account when you can just pay for it on a monthly basis, right? Today’s blog may just make you rethink that strategy… Sometimes these deals reel you in because they seem too good to be true – but that is because they are.
First of all, what is a rent-to-own store? With rent-to-own, customers ‘rent’ an item from these companies, usually a major appliance or piece of furniture, for a monthly cost that is typically lower than a monthly loan payment, making it a fairly attractive option. Once the term is over, the customer owns that item.
For example, as mentioned, some stores will offer the option to rent-to-own, so you feel like you’re buying outright. Herein lies the problem: the rates may seem lower, but the term is way longer – meaning once the total expense is calculated, the customer ends up paying far more than a conventional loan would have demanded -sometimes 4,5, even 6 times the amount.
Also, renting furniture doesn’t build credit! This is something to keep in mind with any long term payment plan – you want any positive credit activity to show on your credit report, because that helps you build and maintain a strong credit score. However, when something does not go reported, that is a wasted opportunity to show your financial stability and strength.
No interest financing at furniture stores is often little better than renting furniture in Canada. Sure, many store cards offer no interest financing, usually for 6 month periods. However, this isn’t really a long enough period of time to save up the total owed, and with so many other costs on your plate, that 6 months can go by quickly and leave you paying huge interest in the end. Unless you know that you will have 100% of the total saved at the end of the no-interest period, this option should be avoided.
So what other options are there for renting furniture in Canada? The best option is to come up with as much of the money as possible, and then finance the difference with a small personal loan that reports to your credit. Set the term as short as possible, 12 months for example, to ensure items are paid off quickly. This means you get the furniture you want, without having to pay for it for years, and at a cost that won’t give you a heart attack!
Looking to finance a large purchase but want to do it the smart way? Prudent Financial can provide you with a personal loan at a reasonable rate, helping you rebuild credit and saving you money.
We even help undischarged bankrupts. Call us today at 1-888-852-7647.