Wednesday, January 7, 2015

Have-to-Have-It and Rent-to-Own

One way the rent-to-own people snag their victims is using "have to have it" marketing.
Click to enlarge and have a good laugh.

A reader sent me the image above.   You can "rent to own" a USED iPhone for $29 a week for 62 weeks for a total payment of $1549.38.   The "cash price"  of the phone is $572.29.   You are paying $1000 just in interest.  That's an interest rate of 50%!!!!  (according to a loan amortization program).

Granted, it is a rent-to-own contract, and the "minimum rental obligation" is 1 week.   I presume no one wants to hang onto a used iPhone for five years as it would be horrifically obsolete by then.   But if a person goes from this rental, to another one, and another one, and so on, they are in effect paying this horrific interest - and even worse, never end up owning the phone.   $1500 to own a $500 phone.

Back in the day, charging that rate of interest would land you in jail for usury Today, it is legal.

Why is it legal today to sell things at rates like this?  Well, today, you are expected to use your common sense and look after your own interests.  This is the new "dog-eat-dog" world we live in, which ironically, the GOP calls a "nanny-state".

The GOP pines for the "good old days" when government regulation didn't "ruin the economy".   But the reality is, in the "good old days" deals like this would be illegal.

Funny how the GOP has sold us this story that America was this land of free enterprise "way back when" - when in fact it was a much more highly regulated place.  And people believe this, too.

But getting back to our story - how can they get away with this sort of crappy offer?   The answer is, of course, that people decide they "have to have" a certain item, and once they decide that, you have them by the nuts and you can take them for every penny.

Poor people in particular fall prey to this.   They want status - or the trappings of wealth - so they pay 2-3 times more for a status item than a rich person pays.   The rich person goes to the cell phone store and either buys a new iPhone or gets one for "free" as part of a contract.   Since they have money and good credit, they can do this.

The poor person has no money and their credit rating - thanks to previous poor decision-making - is trashed.   They cannot get a new iPhone, so they rent one at a cost 2-3 times what the rich person pays.

Of course, people like me do neither.  I spend $100 a year on my GoPhone, because I think the entire "SmartPhone" market is a gimmick designed to get people electronically addicted to a virtual drug.   And it is working, too.

Is my life a desolate, bleak landscape without a smart phone?  Hardly.  They are a nice toy and it is handy if you are traveling to be able to check your bank balance or look up something on Google - or even check your e-mails.    Handy, but not necessary.

And if I was to get one, I would probably buy a used "last year's model" and then figure out a really cheap plan for it (like GoPhone) and use WiFi when I want to access data with it.   Or something like that.   For now, however, I find that being "unplugged" is the ultimate luxury.   Not being plugged into the grid 24/7 is better than being plugged in 24/7.

Have-to-Have-It and Rent-to-Own - the two work in tandem.   And they are a choice in life although if you talk to a lot of young people, they would be mystified.   "What do you mean, not have a smart phone?"  For a kid today, not having a texting device would be render them a social outcast.

But you know, being a social outcast has its advantages.   You can see society from the outside and see how foolish it largely is.

You have choices in life, even when you think you have no choices.

And those choices have the most profound effect on your life - far more than circumstances or any effects by outside actors.   Life throws a lot of shit your way, to be sure.  Sickness, poverty, death.   How you choose to react to these things, however, determines how your life comes out.

Not choosing, or choosing poorly, never works out well.   The subject of my next posting.

UPDATE:  One reason these sort of rent-to-own raw deals also are prevalent in impoverished areas is that people with "off the books" incomes, such as drug dealers and the like, have no credit history or banking resources.   They do have wads of cash and a desire to buy bling.   This sort of business caters to these folks as well - and charges them up the ying-yang in the process.   However, there are far more rent-to-own places out there than there are drug dealers, so a lot of other folks are obviously using these services.