In a previous article I discussed the high interest cost of flex loans and payday loans. Researching this I found many other troubling financial pitfalls for the cash strapped public.
One of these involves renting tires and wheels. At first I was surprised to know these companies even existed. Who would want to rent a tire? My tire is flat. Should I buy a new one, used one, or just rent one?
Actually most of these stores got their start with fancy tire and wheel packages. These package deals were much more costly than a normal set of wheels and tires. In order to make sales they would sell the tire packages with no money down and 90 days to pay, same as cash.
I can’t pay in 90 days
In addition, if you couldn’t pay in 90 days they would do a rent to own contract. In this case you could pay a rental fee until the tire packages and interest fees were paid. Then you would own the tires.
Normal everyday tires
The companies eventually discovered that even everyday tires could be rented. Nothing fancy, just normal tires you can purchase most anywhere.
People unable to buy tires because of no cash and bad credit could now get tires.
No credit, no problem
Most of these stores offer no cash down, no credit check, and rent to own. Customers are told they can drive off on the new tires and return them at any time or keep them until they own them.
This enabled people to get new tires. However, if the tires weren’t paid in 90 days, they got expensive very quickly. The contracts are set up with weekly or monthly payments.
The payments could be as low as $14 a week, but could last as long as 18 months. These rates would amount to a total cost of around $1000. However, these same tires could be found for about $350 at other tire retailers.
I need tires now
I know they need tires, but what about alternatives? Maybe a used tire or two. Possibly try some other type of transportation temporarily until funds are available. Maybe sell something to get the money.
Problem is, these rental places make it seem so easy and cheap to get what they want, they sign the contract.
I can’t continue paying
Like the people caught with the payday loans, they later find they are paying way too much for way too long. In which case they could return the tires or pay off the debt early. The first case leaves them with no tires and the second case means coming up with cash they most likely still don’t have.
It’s my opinion this is another way the neediest people are getting taken advantage of. We need to educate the public about the downside of these purchase options. Also, force these companies to be more forthcoming and honest about the contract restraints and extreme fees. Fees so large they sometimes hurt the individual more than they help.
I certainly don’t like waiting for things, but using payday loans, flex loans, title loans or rent to own tires is not beneficial in the long run. #Buzz