Consumer’s EdgeConsumer’s Edge
Consumer Protection Division, Maryland Office of the Attorney General
Rent-to-Own: Worth the Convenience?
A Maryland woman signed a rent-to-own agreement for
a computer. The weekly payments were $28 for a period
of 52 weeks. If she made all the payments, she would pay
a total of $1,456 to own the computer, which was used
and had a cash price of only $650.
If you need a television, major appliance, or furniture
but you don’t have the cash or credit to buy it outright,
you might be tempted to go to a rent-to-own store. These
stores advertise that you can take home the item imme-
diately, simply by agreeing to make a weekly or monthly
payment. You’re obligated only to pay each rental pay-
ment as it comes due, and you are free to end the arrange-
ment by returning the merchandise to the store.
This arrangement may sound convenient, but it comes at
a very high price. Buying on a rent-to-own plan will often
cost you double what you would pay for the item with
cash, on layaway, or on an installment plan.
For example, a new $400 washing machine purchased on
an 18-month installment plan at the maximum allowable
interest (24%) would cost $480 total. Under an 18-month
rent-to-own plan, you’d typically pay $1,000 or more for
the same washing machine. Plus, the rent-to-own washing
machine might be a couple of years old and previous-
ly rented to many other people.
Maryland law does not place any limits on the nance
charges or interest rent-to-own dealers can charge. The
dealers are also not required to disclose as an annual
percentage rate (APR) the nance charge or interest con-
sumers end up paying to own the product. Therefore, you
cannot easily compare the cost of buying under a rent-to-
own plan with buying on, for example, an installment plan.
If rent-to-own dealers did have to disclose an APR, con-
sumers would see that their rates are often as high as 120%
to 150%.
Dealers, however, are required to disclose the “Cost of
Lease Services,” which is the dierence between the nal
purchase price of the rental property if you make all pay-
ments due under the lease and the cash price of the rental
property. The rental agreement must contain a disclosure,
similar to the one below, above your signature that states
the costs under your rental agreement:
Consider All Your Options
Rent-to-own stores market to people who may think they
have no other options, because of low income or bad credit.
But there may be less-expensive alternatives:
• Can you do without the item until you have saved
enough money in the bank to pay cash? If the
woman who wanted a computer could wait a few
months, perhaps by using a friend’s computer or
one at the public library, she could save $28 a
week instead of paying a rent-to-own dealer. In six
months she would have enough to buy a new com-
puter priced at $650. She would own the computer
in half the time and save more than $700.
• Can you buy the item on a layaway plan? You may
only need a small down payment.
• Can you buy the item on an installment plan at a
retail store? With an installment plan you can take
the item home immediately, as with rent-to-own.
The law limits the amount of interest that can be
charged on installment plans (maximum 24%), so
Issue #109
January 2023
Anthony G. Brown, Maryland Attorney General
these plans are less costly than rent-to-own agree-
ments.
• Can you get a short-term loan from a lending
institution such as a bank or credit union to pur-
chase the item?
• Can you nd a used item through on online
marketplace, the classied ads, a yard sale, or
second-hand store? You may be able to nd what
you need for the cost of only a few rent-to-own
payments.
Your Rights Under the Law
If you do decide to enter a rent-to-own agreement, be
aware that Maryland law provides some protections
for rent-to-own consumers. The lessor must give you a
written receipt for any payment made by cash or money
order. The required disclosures must be available in any
language that the lessor uses to advertise rental purchases.
Rent-to-own contracts must disclose the following import-
ant information:
Whether the item is new or used. This information may
be especially important to know when considering pur-
chasing an appliance, a TV, or a computer.
What it will cost you. The contract must state how much
the item would cost if you paid cash, how many rental
payments you must make to own the item, how much each
payment will be, and how much you’ll have to pay in total
to own the item. With this information, you can look at the
total amount you will pay to own the item and consider if
it’s worth it.
Your early purchase option. The contract must give
you the option to purchase the item earlier than original-
ly planned by paying a certain amount. The method for
determining that amount must be described.
Your right to “reinstate” after late payments or repos-
session. The law allows consumers who are late in making
payments to retain their rights to the item, even after it has
been repossessed, if they make all outstanding payments.
These provisions protect consumers who have made a
substantial investment toward owning the property.
If the dealer repossesses an item you were renting because
you failed to make a payment, the dealer must give you
a written notice that states your right to reinstate the
rent-to-own agreement, the last date by which you
can reinstate the agreement, and the amount you will have
to pay to reinstate. You may reinstate the rent-to-own agree-
ment within 15 days of the repossession by paying all past
due charges, the reasonable costs of pickup and redelivery
and a reinstatement fee of $5.
Maintenance and damage. The dealer is responsible for
keeping your rented items in good working order without
extra charge to you, as long as you have not damaged it.
You are responsible for loss, damage, theft, or destruction
of the property while it’s in your possession. If the item is
lost, damaged, or stolen while in your possession, you must
pay the dealer the early purchase option price of the item.
Warranties. If any part of a manufacturer’s warranty
covers the rental item at the time you acquire ownership,
the warranty will be transferred to you if allowed by the
warranty.
A sample rental-purchase agreement can be found on the
next page.
If you have a problem with a rent-to-own transaction,
contact the Consumer Protection Division at 410-528-8662
(toll-free in Maryland: 1-888-743-0023).
Consumer Protection Division
200 St. Paul Place, 16th Fl., Baltimore, MD 21202
• General Consumer Complaints: 410-528-8662
Toll-free: 1-888-743-0023 TDD: 410-576-6372
• En español: 410-230-1712
9 a.m. to 3 p.m. Monday-Friday
www.marylandattorneygeneral.gov/Pages/CPD/
• Health Consumer Complaints: 410-528-1840
Toll-free: 1-877-261-8807 TDD: 410-576-6372
9 a.m. to 4:30 p.m. Monday-Friday
www.marylandcares.org
• For information on branch oces in Largo, Salisbury,
Hagerstown, and a full list of oces across Maryland, visit:
www.marylandattorneygeneral.gov/Pages/contactus.aspx
How to contact us
The Consumer’s Edge is produced by the Maryland Attorney
General’s Office. Reproductions are encouraged.
Maryland
Attorney General
Anthony G. Brown
www.marylandattorneygeneral.gov
