No couch? No cash?  What do you do?  That’s the focus of today’s Consumer Alert.

I got a call from a viewer who was sure she was being ripped off and she wanted me to investigate.  She had bought furniture at a store that sells rent-to-own furniture. She had faithfully made monthly payments but said she hadn’t made a dent on the purchase price. So, I asked her to send me her contract.

Her purchase agreement says her monthly payment is $231.99 over 18 months.  So, she signed on the bottom line. But she didn’t notice this some disturbing numbers right there in black and white. The contract says her cash price is $1,950. That’s the price she would pay if she could pay for the furniture on the spot. But if she rents the furniture for the scheduled 18 months, she will have paid $2,200.62 in just rental fees. That would bring her total amount for the furniture to $4,152.62, more than double the cash price.

And no, it’s not a scam.  it’s perfectly legal.  New York law caps rent to own at 2.25 times the cash price. And that’s about what she’s paying.  That’s why experts say rent to own should be the last resort.

“If she had the ability to get credit, she could go to a bank or a credit union or anywhere else and probably borrow the money, at this point probably at 6 to 10 percent,” said Don Chesworth, a partner at the law firm, Tully Rinckey.

Let’s take a look. If she borrowed the cash price of $1,950 at a 10 percent interest rate, with good credit her payments would be $117, and her total interest paid would be only $158, as opposed to more than $2,200 in rental fees. But if you’re stuck in a rent-to-own contract, New York law mandates you be given an out within the first four months.  

So, if this viewer is able to take that option, she’ll be charged 12 percent interest on the furniture. minus the total of all rent paid.  So, the total amount she’d owe would be about $1,488 plus tax.

“You just need to read those [rent-to-own contracts] carefully, and make sure that when you’re signing all the different parts of the agreement that you understand what they mean,” said Chesworth.

Supporters of rent-to-own plans say it gives folks with bad credit or no credit a chance to rent the furniture without a credit check. Critics say they’re predatory, taking advantage of the poor. Certainly, paying more than twice the price for your furniture is a rip-off, but a legal one. Experts say first consider other options. When my hubby and I got married 25-years ago, we furnished our first house primarily with great stuff I found on Craigslist.  That new couch is not comfortable if it’s hurting your wallet.