Have you ever seen those “deals” that offer a brand name computer or LCD Television for small payments and no credit check? I’m sure you have seen the infomercials or heard ads on the radio. Basically, these agreements go one of two ways:
1. Rent to Own
There are many rent to own establishments across the Country. These stores offer new or slightly used merchandise for easy payments made weekly or monthly. If a payment is missed, the products are repossessed. If you pay on the product for a pre-arranged term, it will be yours when all of the payments are made. The biggest issue people run into with rent to own is that you will easily pay for the product (maybe even twice by the time you are done) and then some. The same is true of the companies that offer a similar option for the expensive electronics.
2. Adjusted Payment Plan
The second option offered by companies who offer electronics to those who have credit issues is a payment plan unlike most. This plan allows the customer to pay a decent sized down payment, and then a number of payments (weekly or monthly) and receive the product after a pre-determined number of payments have been made. This amount paid is usually a substantial portion of the total purchase price of the product. Which leaves one problem: After all of the money that has been paid, there is still a lot left to be made.
There seems to be a growing number of these companies that seem to prey on those who do not know how to properly handle their finances. Most notably, a company I’ll call “Red Rhino” (not their real name) so I do not get a cease and desist order, offers brand name computers and televisions among many other products with a payment system similar to number 2. If patrons of Red Rhino would do a bit of research before deciding to buy, they would find a web of scam warnings and better business bureau complaints.
A visit to the Red Rhino website offers hundreds of electronics with (full) prices clearly marked, but little about their payment plan for those who can not afford the lump sum option. From what I have gathered through independent research and thorough readings of complaints, the adjusted payment plan is pretty accurate. These companies may very well change the rules for different customers, having separate plans for different customers.
Since a slew of complaints about Red Rhino have been received by the better business bureau and other consumer advocate organizations, there seems to be a slight change in the tide within the company-and those arranged similarly. This comes directly from the BBB website:
Before any merchandise is shipped, –Company Name Removed– requires customers to establish a record of nine consistent payments â€“ usually in the form of an initial deposit followed by weekly payments â€“ all of which are debited directly from consumers’ checking accounts.
The last two words in this statement are the daggers in the side of customers. Those with no credit or bad credit need to keep on their toes and be very wary of companies who directly debit checking accounts. Here’s Why: When a direct debit is authorized from a checking account, the transaction can not be reversed by the bank. This means that if you get irritated with the poor customer service or a product is not shipped in a timely manner, you will have to call the company (if you can get a hold of them) to stop the transaction, Or, you will have to file a fraud claim with your bank. If you do go so far as to file a fraud claim, getting the claim approved will be very difficult because they (legally speaking) have every right to extract the funds from your account.
Buyer Beware Applies to Every Transaction you Initiate-
While I do not like to share “buyer beware” type stories, I get too frustrated to ignore them. I see people I know and like who get themselves into a bind, and I just think, “this could have easily been avoided”. I am far from flawless when it comes to any facet of life, but one thing I am is careful. Especially with my money. It is not hard for me to call BS on a potential scam, and I know the difference between a good investment and a bad purchase. Always be aware of what you are paying for…whether it is a regular expense like utilities or a “luxury” like a computer, TV, or some other type of entertainment. Good credit or bad, nobody is immune from a greedy company with some questionable policies and practices. Never be afraid to ask questions. Not just to the company itself, but to your friends, family and trusted associates (like me). They will not steer you wrong.