Rent-to-own stores offer a powerful temptation for people who want new furniture or the latest TV but can't afford them.
But beware the price of impatience: Sticker prices for merchandise at rent-to-own stores are often much more than at regular retail outlets -- and the costs can climb even higher for a long-term rental.
It pencils out well for rent-to-own companies, who find the central San Joaquin Valley a ripe market because of its lower average incomes and high rates of unemployment, foreclosures and poverty.
Across the five-county region, more than 56% of households had annual incomes of less than $50,000 in 2009, according to the U.S. Census Bureau, and more than 40% had incomes of less than $35,000.
That fits well with the rent-to-own industry's target market. Industry figures show that 97% of rent-to-own households earn less than $50,000 a year. More than two-thirds of the households earn less than $36,000 a year.
"Just as Neiman Marcus is in Beverly Hills and not in Compton, it's natural to go where business will be convenient to the consumer," said Xavier Dominicis, a spokesperson for Texas-based Rent-A-Center.
Rent-A-Center and Aaron's, the nation's largest rent-to-own chains, together have two dozen stores in the five-county Valley region.
That means there's no shortage of opportunities for the poor to pay more for furniture, appliances and other basic household equipment.
And because rent-to-own stores in California are not regulated as credit lenders, "ultimately, consumers end up paying usury-level credit costs for something they could either buy outright for much cheaper or rent for much cheaper than at RTO shops," said Pedro Morillas, legislative director for the California Public Interest Research Group.
Doing the math
Rent-to-own stores "are not the worst things in the world if you're renting in a pinch to fill an immediate, short-term need," Morillas said. "Sometimes these stores are the only place where you can rent an appliance like a refrigerator."
But it pays to weigh whether the merchandise is a necessity or a luxury that can wait.
"It's hard to do without a refrigerator, but not so hard to do without a TV," Morillas said.
His organization's major concern is for customers who ride out a contract to the bitter end for ownership.
Visits to several rent-to-own stores in the Fresno area show just how much more someone can end up paying in a long-term rental.
Take, for example, a 42-inch plasma TV that sells for $538 at major retailers. In one rental showroom, the identical make and model carries a sticker price of $758 -- about 40% above regular retail -- if a customer pays cash on the spot or pays it off in 120 days.
If a customer can't afford to buy the product outright, the television can be rented for $27.99 a week. A customer can walk away from the payments and return the TV at any time without penalty, or keep making weekly payments and own it after 61 weeks.
But those 61 weekly payments add up to more than $1,700 -- or more than three times the regular retail price.
For the cash-strapped and people who don't have credit, the appeal is obvious: Manageable weekly or monthly payments, no credit check, immediate delivery, no penalty to terminate a rental or lease.
And as the economy continues to struggle after a deep recession, more consumers seem to find those short-term benefits attractive.
"I don't mean to say the economic downturn was good for business," said Richard May, public affairs director for the Association of Progressive Rental Organizations, a Texas-based rent-to-own trade group. "But when the credit market collapsed in 2008, people's credit was gone. ... When that happened, rent-to-own became a viable option for people."