Your Money : Paying Dearly Under Rent-to-Own Plans
Rent-to-own purchasing plans can more than double the cost of new appliances, according to a survey released Thursday.
However, a trade group for the rent-to-own industry, which caters mostly to people with poor credit, said prices are higher in part because they include delivery and repair costs over the life of the contract.
The new survey, conducted by the California Public Interest Research Group, found that rent-to-own stores charge up to five times more than retail stores for the same item. The survey found that terms of the rental contracts implied an average interest rate of more than 100%, compared to an average credit card rate of about 18%.
As an example, the survey cited prices at a Rent-a-Center store in Berkeley. The store charged $961.26 for a 19-inch Zenith television set over 78 weeks: $607.93 for the set and $353.33 in rental charges. A Good Guys electronics store nearby charged $259 for the same set.
The Assn. for Progressive Rental Organizations called the survey misleading and offered its own comparisons. It said that when financing costs, delivery charges and warranty costs are included, the price gap closes a bit. The association said an El Paso shopper financing the purchase of a 25-inch console TV over 21 months would pay $1,132.95 at a rent-to-own store and $877.50 at Sears, Roebuck & Co.
Of course, a Sears shopper has the option of paying $549 cash for the set and refusing additional delivery and warranty charges.
The surveys come amid a legislative battle. Rep. Henry B. Gonzales (D-Tex.) has introduced a bill supported by consumer groups that would regulate rent-to-own rates and prices. Rep. Larry LaRocco (D-Ida.) has introduced an industry-supported bill that would require rent-to-own stores to disclose terms of the transaction.
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Contractor reforms: As earthquake repairs gain steam in Los Angeles, the Legislature is considering a slew of measures that would correct perceived shortcomings in how the construction industry is regulated in California. The legislation results from Assembly committee hearings on the industry last year.
The measures so far are unopposed, although that could change.
“We are getting a lot of questions from contractors, and some of that could turn into opposition,” said Michael Miller, an aide to Assemblywoman Jackie Speier (D-San Mateo), chairwoman of the committee on consumer protection, governmental efficiency and economic development and author of two of the bills.
A summary of the legislation:
* A bill by Assemblyman Mickey Conroy (R-Orange) would require home improvement contractors to tell customers about license suspensions or revocations, complaints or legal judgments against them. Contractors who fail to do so would face fines.
* Assemblywoman Debra Bowen (D-Marina del Rey) proposed three bills that would eliminate waivers from the state contractor’s license exam for people who have worked for a contractor for five years, require contractors who have had their licenses suspended or revoked to carry bonds greater than the $5,000 bond already required, and prohibit subcontractors from placing liens on homes when general contractors fail to pay them.
* A bill by Assemblywoman Diane Martinez (D-Rosemead) would tighten arbitration rules in contracting disputes. Arbitrators would be required to tape-record hearings in construction disputes and keep them for three years and provide written decisions based on those hearings. People employed in the construction industry could not serve as arbitrators.
* Speier proposes, among other things, to increase the size of the bond contractors must carry to $10,000 from $5,000 and to extend bonding coverage to “any home improvement contract” from “a homeowner’s personal residence.” A separate measure would extend the statute of limitations for the Contractors State License Board to investigate complaints about latent construction defects to 10 years, from the current three years.
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Brand watch: Procter & Gamble is slashing the price of its Joy dishwashing liquid in yet another concession to value-conscious consumers.
P&G; said it is lowering the price of Joy by 12%, stripping it of its premium image to compete with cheaper “value-priced” brands. The price cut takes effect in mid-March.
Over the last year or so, P&G; has steadily slashed prices on consumer goods to compete with lower-priced brands and store labels. Last April, it slashed prices on its Pampers and Luvs disposable diapers, remaking Luvs as a “value-priced” diaper. P&G; has also eliminated some of its weaker brands, such as Top Job household cleaner.
Joy dishwashing liquid has been having a rough time. Sales in supermarkets fell 25% last year to $39.7 million, according to A.C. Nielsen, putting it far behind P&G;’s Dawn and Ivory, Colgate’s Palmolive and Lever Bros.’ Sunlight. Sales of dishwashing liquid overall fell 6.5%.
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Odds and ends: The gift that keeps you giving: To assist in record-keeping, MasterCard suggests people use credit cards when making charitable donations. But people who don’t pay balances immediately will also be making interest payments to credit card issuers. . . . The color of money: First Consumers Bank of Oregon is introducing a credit card aimed at Irish Americans. It features the colors of the Irish flag.
