Rent-to-Own vs Buy Calculator

Rent-to-own total cost comparison compares what you ultimately pay for an item through a rent-to-own agreement versus buying outright or financing through a traditional loan. The comparison almost always reveals rent-to-own as dramatically more expensive.

Rent-to-own total cost formula: Total RTO Cost = Monthly Payment × Number of Months

Effective APR of a rent-to-own agreement: This requires solving for the interest rate in the standard loan formula where the “loan” is the retail price and “payments” are the RTO payments.

Price premium formula: Price Premium (%) = (Total RTO Cost ÷ Retail Price − 1) × 100

Comparison cost: True Savings = Total RTO Cost − (Retail Price + Credit Card Interest)

What each variable means:

• Rent-to-own payment — covers the retailer’s cost, a financing charge, and a large profit margin; the implied annual interest rate is typically 80–200% APR
• No credit check — the primary marketing hook; RTO companies target people with no credit or poor credit who cannot get traditional financing
• Early purchase option — most RTO contracts allow early buyout at the remaining balance; the earlier you buy out, the less total interest paid
• Ownership transfer — you do not own the item until the final payment; the company can repossess it if you miss payments

Reference: typical rent-to-own cost multipliers:

• Electronics (TV, laptop): pay 2–3× retail price over 12–24 months
• Appliances: pay 2–3× retail price over 18–24 months
• Furniture: pay 2–3.5× retail price over 18–36 months
• A $500 laptop on an 18-month RTO at $50/month = $900 total — 80% premium

Worked example: Washing machine. Retail price: $650. Rent-to-own: $75/month for 18 months.

• Total RTO cost = $75 × 18 = $1,350
• Price premium = ($1,350 ÷ $650 − 1) × 100 = 107.7% (more than double the price)
• Implied APR ≈ 130–150% (solving the loan equation)

Alternative: Save $50/month for 13 months and buy outright at retail = $650 total — saving $700. Or use a credit card with 24% APR: 18 months of payments at ~$40/month = ~$720 total — still saving $630 versus RTO.

Rent-to-own is almost never financially rational when any alternative financing is available.