Super Bowl TV: Don't fumble with rent-to-own

It was an OT field goal that sent the New Orleans Saints into Super Bowl XLIV. On Feb. 7, the Indianapolis Colts will face off against the Saints -- and fans on both sides are getting ready to party. 

 

The Super Bowl has evolved into an annual American house-party tradition that appeals to fan and novice alike. It's undoubtedly the only televised event in the world where the commercials garner almost as much attention as the actual game.

 

And the centerpiece of that party is, of course, the television.

• Bing:How to buy an HDTV

Retailers traditionally sell up to 50% more televisions in the weeks leading up to the Super Bowl than in other comparable periods. But if you're dying to impress your friends with a new flat screen this year and don't have the cash, resist the temptation to try renting to own. 

 

Watch the following 90-second news story I did a few years back about renting to own, then meet me on the other side for more. 

 

 

Let's bring that story home with an example. Say you waltz into a rent-to-own store and find a $700 flat-screen TV. The good news is you can walk out with the TV in short order and with very little out-of-pocket expense. The bad news is that you could easily pay three times what the TV costs -- at least.

 

Here are some sample numbers: That $700 flat-screen might have a $29.99-per-week rental fee for a two-year period, after which you'll own it. Consider that 104 payments of $29.99 adds up to $3,118.96 -- more than four times what it costs.

 

In fact, rent-to-own makes a credit card purchase look like an intelligent option. Putting that entire transaction on an 18% credit card and making the same payments would have it paid off in eight months and save $2,300 over rent-to-own.

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The bottom line is that buying from a rent-to-own place is like borrowing from a pawn shop: not a good move. Here's a story I recently did about pawn shops.

 

Better idea? Start using a budget now so you can set aside enough money for that TV next year. Here's a story I did about creating a budget that works.

 

Flat screen for a day?

It's possible to just do a short-term rental from some rent-to-own places. But maybe not for one day. Rent-A-Center, for example, requires a minimum four-week rental period. (According to a spokesperson, the one-month minimum is to help them recoup the cost of a truck and two employees to deliver and set up the television.)

 

So the rule when it comes to rent-to-own is don't. But if you're going to ignore that rule, here's another look at the questions you should ask: 

And here's the better way of getting a TV for less:

• Use layaway.
• Check scratch-and-dent sections at electronic stores.
• Watch for garage and estate sales.
• Buy a display model.
• Use a coupon search engine to scour the Net for deals.
• If you insist on borrowing to buy, open a credit union account and borrow from them. Still not smart, but you'll pay a lot less interest. 

And if you do end up with a digital TV, don't overpay for HDMI cables!

 

Related reading at Money Talks News:

• Find a better credit card
• 365 ways to save
• My latest book: 'Life or Debt 2010'