Cheap furniture is sold at furniture rental places for nearly double its retail price, using installments.
I have mentioned furniture rentals as an example of a poor financial decision. These places thrive in ghettos and other poor neighborhoods, which alone should tell you why they are a bad idea.
But I realized, I never really sat down and illustrated why they are such a bad idea.
Rent-to-own furniture caters to the "have it all now" mentality of life, in which working-class slobs sign their lives away to have now the nice stuff they should save up for an have later.
The problem is, of course, is that you are not really "renting" the furniture so much as buying it on time - and thus you are paying interest - often at a staggering rate - to own what is a pretty trivial asset.
The same comments about furniture rental could be applied to high-pressure furniture sales places which offer you consumer financing loans at 21% - they are also a bad deal.
Let's look at this living room set from a local rent-to-own furniture store and you'll see what I mean:
The "Atlantis" Living Room features plush overstuffed seating and arms, as well as tufted plush back cushions. Keep your living room looking contemporary and sleek with rich quality bonded leather everywhere your body touches.
Every Woodhaven frame is glued, stapled and corner blocked for extra strength and durability. All seating is constructed with heavy, no-sag springs and attached with padded steel wire. Woodhaven uses high density foam with foam or dacron wrap, adding longer life and extra support.
7pc Atlantis Living Room CollectionSKU: W36$109.99/mo | 24-mo lease Everyday low price: $1,639.94
The first thing you notice about this deal is how cheap the purchase price actually is. $1639.94 is not a lot of money for a seven piece living room set. This is really cheap furniture and not very well made.
The second thing you notice is that if you make all the lease payments on this set, you will spend $2639.76 in total, or about $1000 more than the actual retail price of the set. That's about a 40% interest rate there my friend!
Even a 14% credit card is a better deal that that. But how about just saving up $109.99 per month for 15 months and then just paying cash for it? You save a neat thousand bucks.
Of course, the problem with this kind of furniture is that it is cheap furniture, and by 24 months, it may be worn out - and you start the process all over again.
Quality furniture isn't cheap - but you have an entire lifetime to accumulate it. You will inherit pieces from your family. You may find some well-made pieces or even antiques in a secondhand store. Good quality durable furniture lasts a lifetime and never wears out.
The poor, sadly, tend to buy cheap furniture and then finance it on time - and then buy more cheap furniture when the cheap veneers and gaudy faux chrome finishes wear off.
Just say "no" to furniture rental. There are no bargains to be had here.