12-15-2015 12:30 PM
This may not be the right forum but couldn't see an alternative.
I know "rent-to-own" places like Aarons and RAC are the devil... however, recently I was on ABT's website and noticed that they are offering a no credit check leasing option by TEMPOE (formerly called "Why Not Lease It").
Basically, the way it works is the leasing company buys the widget and you pay the leasing company. You have a 30, 60, or 90 day buy-out clause. If you purchase after 30 days, you pay cash value + 8 percent (everything you paid in up until that point is credited). After 60 days, it is 10 percent and after 90 days, it is 12 percent.
The price you pay for the item is the same price you would pay if you paying by cash or using regular credit.
So I'm trying to figure out the downside to this other than the additional "8/10/12 percent" charge on top of the purchase price.
I understand other stores like Sears and Walmart and KMart are also utilizing leasing companies. To me, it doesn't seem like that bad an idea -- especially if you need to make a major purchase but don't have the credit or money in the bank to do it (like, oh, I dunno -- when my washing machine lid cracked into a bazillion little pieces last year and I needed to replace it). I could see if you were paying hugely inflated prices like RAC and Aarons where they basically strip search you AND your family before extending credit. But for mainstream retailers, wondering what I'm missing.
12-15-2015 02:29 PM
I went and used their calculator (http://www.tempoe.com/calculator/), and a couple red flags flashed for me.
First, if you live in one of five states, the early buyout option is not available. If you are able to do the early buyout in your state, *MAYBE* you can make an argument for it. If you purchase at the 90 day mark, you really do appear to be paying only 10% on the cost of the loan.
If you buyout the lease at the end of the "5 period minimum term" you end up paying 45% of the leased amount in "fees." Its worth noting that a period can be either 14 days or 28 days.
This doesn't appear to be lease-to-own, either. You have to continue paying that amount each month until you return the item or do the buyout.
If you don't have the money or credit in the first place, I would doubt that a person would be diciplned enough to set side the necessary cash to make monthly payments AND buyout the balance in less than 90 days, in which case that person would end up in a worse situation than when they started!
I'd steer clear if I had any choice in the matter... You'd be better off getting a temporary $50 used washer off Craigslist until you could save for something better.
12-15-2015 02:39 PM
Thoughts? Yeah. Don't.
This is predatory sub-prime lending.
They claim to be "fee-based", so they "dont have an interest rate"... which sounds like a way of weaseling out of displaying APRs.
Looking at the info currently on the TEMPOE website, they actually show "just" 5/8/10 percent for the 30/60/90 "buyouts".
Using their own calculator, for buying an item with a list price of $1,000:
"Lease" is 5 months
First payment due in-store ($180).
Buyout at 30 days is $1,050 total out-of-pocket. (60% APR)
(or second payment is $180, $360 total spent on lease.)
Buyout at 60 days is $1,080 total out-of-pocket. (48% APR)
(or third payment is $180, $540 total spent on lease.)
Buyout at 90 days is $1,100 total out-of-pocket. (40% APR)
Fourth payment is $180, $720 total spent on lease.
Fifth payment is $180, $900 total spent on lease.
Buyout at end of lease is $550 additional! (for $1450 total out-of-pocket) (108% APR)
(or continue to lease at $180/month, now having spent $1,080 and counting for a $1,000 item you don't own, until you decide to buy it out or give it back.)
A buyout after a year of "leasing" would be $2,710 (!!) (171% APR)
In contrast, even a credit card with a very bad (but not completely ursurious) rate of 33% would enable you to pay the same $180/month for six months (and about $20 the seventh month), and have paid the same $1,100 total out-of-pocket that the 90-day buyout from TEMPOE offers.
(And a card at a more usual high-but-not-uncommon rate of 23% would reduce the payoff time slightly, and reduce the total out-of-pocket to $1,068, and of course a low APR card or a 0% offer is even better.)
This is actually one of the few cases where carrying a balance on a high-APR credit card is the BETTER option.
But only because the "lease" alternative is such a horribly bad deal.
12-15-2015 09:24 PM
I agree -- unless you are not going to exercise the 30/60/90 day option, it is a total money suck.
However, in the buy-out scenario, the payments that you made are credited towards the purchase price. So let's say you bought something worth 1000 bucks and had a 200 lease payment (pulling numbers out of .... well, somewhere) for the ease of math.
You pay 200 bucks when you initiate the lease.
You pay 200 bucks at the 28-day mark
You pay 200 bucks at the 56-day mark
you pay 200 bucks at the 84-day mark
So at day 90 when you go to purchase the item, you pay 1000 - 800 + the 10 percent or 300 bucks.
However, if this is the way it works, it seems like a reasonable option to finance a big purchase without spiking you're credit card utilizations or gutting your emergency fund etc.
Again, I may be missing something but that's why I've opened it up to the forum. If it is as another poster said where at the end of the 90 days, you still wind up paying full price, then yeah, it's incredibely stooooopid and you'd be better of taking out a payday loan (being facetious here) to buy whatever.
12-22-2015 06:57 AM
09-16-2016 04:19 PM
As a former employee, let me give you the run down on how this program works:
Every WHY NOT LEASE IT Lease has a term of 18 months. If you reside in NJ, WI, VT, and WV, you are obligated legally and contractually to pay for the full 18 month term or return the merchandise you leased (you will NOT receive the money you paid into back, you essentially paid to rent the items; you return the items at your expense).
If you don't live in those 4 states, then you have 3 options on how to proceed with the lease: 1) exerceise your Early Purchase Option (EPO), 2) set up a Buyout (BO), or 3) return the merchandise you leased.
1) EPO - This option only applies within your first 90 days of having the lease opened. If you go beyond the 90 days, then you will need to do a BO. When doing an EPO, you have 3-tiered payment options: 30,60, or 90 days. What this means is you can pay off your lease at any point within the first 90 days, but the amount varys when you do.
2) BO - This option applies if you went beyond your 90 days without doing an EPO, but you've met your intitial ("minimum") term amount. The initial term equates to 5 months of payments (or 10 payments if you pay every other week) and equals only about 80% of the lease amount. These are the payment dates you will see on your receipt. These are NOT the only payments you make, just the payments you NEED to make to exercise this purchase option. When you set up a BO, you have 6 weeks to complete the total cost of the BO. In this 6 week time frame, any regularly scheduled payments set you draft your account are cancelled so you can make your BO payments to purchase out of your lease. Once the last payment is received, all payments have cleared, and there is nothing past due on your account, your lease will be considered satisfied under the terms of the agreement and will be closed. If at any point a BO payment declines and you don't make an effort within 24 hours to either make the payment or make an arrangement for it, your BO will be voided, you will return to normal lease payments, you will be responsible for any past due showing on your account, and you will need to restart the BO when you are ready to do so. Generally, representatives in billing are willing to make arrangements to keep you on the BO even if you're beyond the 24 hours, but if you are rude and uncooperative, they will NOT extend you that courtesy. With BOs, you will be paying much more above the cost of the lease than an EPO, but far less than the full term. It may suck, but the company has to make money somehow.
3) Return the items - If you chose to return everything you leased, you need to have made 5 months worth of payments (similar to the BO). You will need to ship the merchandise to their New Hampshire location at YOUR expense. You will NOT get any money back that you paid into the lease.
Also, there are 3 types of fees you can incur on your lease. If a payment declines and is returned, a $25 (newer leases are $20) fee will be assessed to your account the day it declines. If a payment needs to be moved beyond 10 business days, a $15 fee will be assessed to your account. If you return items to us and there are bugs, you will be charged a $50 cimcid fee.
The billing department of WNLI is in no way out to get you. It's not their fault when stores who use WNLI to sell their merchandise don't tell you how the program works correctly. That's why it's up to you, the consumer, to READ EVERYTHING BEFORE YOU SIGN ANYTHING. These leases are legally and contractually obligating agreements, it's not the billing department's fault you didn't read anything before you signed it. For all you know, the leases could say that you owe them your first born child and a kidney and you would be legally obligated to give it to them. If you can't read any documents before you sign, then DON'T SIGN. If you decide to sign anyways, GET COPIES OF YOUR LEASE AGREEMENT along with your receipt (you have 30 days MAX from the day you sign until the last day the store will be willing to accept your return of the merchandise and void out your lease agreement). Lastly, almost every billing department representative will waive fees for you if they can and if you're nice. IF YOU'RE A JERK TO THE REPRESENTATIVES, EXPECT TO PAY ANY AND ALL FEES YOU INCURRED because you felt the need to be an arsehole. Trust me, they hate their jobs as much as you hate talking to them.
03-20-2017 12:59 PM - edited 03-20-2017 01:03 PM
HaleyRose924, Thank you for this explanation. It should be noted that the four states that don't have the buyout feature are because of those states' specific laws, NOT because TEMPOE doesn't want them to have it. Customers need to realize that our program works much the same way as leasing a car. What they are paying on when they buy it out is the fair market value of the merchandise, which if they were to return it to us, is what we would be able to sell it for. This program is used a lot by people who can't get credit for big ticket items they need like furniture and appliances. We've expanded and offer jewelry, bedding, and eyeglasses as well.
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