Rental America: Why the poor pay $4,150 for a $1,500 sofa

[mahatmakanejeeves]

Last edited Tue Oct 21, 2014, 12:28 PM - Edit history (1)

Worse, the prices charged are usually full-list to begin with. Start from there and go up. And up. And up.

The blow-in ads for a rent-to-own store fall out of Recreation News, a publication aimed at federal employees, every month.

It takes a lot of money to be poor in this country.

Rental America: Why the poor pay $4,150 for a $1,500 sofa

Not all boats

No credit, no cash, no bank account? There’s still a place to go shopping, but it comes at a price.

By Chico Harlan October 16 at 7:56 PM

CULLMAN, Ala. — The love seat and sofa that Jamie Abbott can’t quite afford ended up in her double-wide trailer because of the day earlier this year when she and her family walked into a new store called Buddy’s. Abbott had no access to credit, no bank account and little cash, but here was a place that catered to exactly those kinds of customers. Anything could be hers. The possibilities — and the prices — were dizzying. ... At Buddy’s, a used 32-gigabyte, early model iPad costs $1,439.28, paid over 72 weeks. An Acer laptop: $1,943.28, in 72 weekly installments. A Maytag washer and dryer: $1,999 over 100 weeks.

Five years into a national economic recovery that has further strained the poor working class, an entire industry has grown around handing them a lifeline to the material rewards of middle-class life. Retailers in the post-Great Recession years have become even more likely to work with customers who don’t have the money upfront, instead offering a widening spectrum of payment plans that ultimately cost far more and add to the burdens of life on the economy’s fringes. ... The poor today can shop online, paying in installments, or walk into traditional retailers such as Kmart that now offer in-store leasing. The most striking change in the world of low-income commerce has been the proliferation of rent-to-own stores such as Buddy’s Home Furnishings, which has been opening a new store every week, largely in the South.

In some ways, the business harkens back to the subprime boom of the early 2000s, when lenders handed out loans to low-income borrowers with little credit history. But while people in those days were charged perhaps an interest rate of 5 to 10 percent, at rental centers the poor find themselves paying effective annual interest rates of more than 100 percent. With business models such as “rent-to-own,” in which transactions are categorized as leases, stores like Buddy’s can avoid state usury laws and other regulations.

And yet low-income Americans increasingly have few other places to turn. “Congratulations, You are Pre-Approved,” Buddy’s says on its Web site, and the message plays to America’s bottom 40 percent. This is a group that makes less money than it did 20 years ago, a group increasingly likely to string together paychecks by holding multiple part-time jobs with variable hours.
....

[e-mail]

[stevenleser]

1. Everything is set up here to punish the poor and lower middle class.

It's really a shame.

[yeoman6987]

35. Why don't they go to the consignment shops?

I do and I am not poor. Nobody needs a sofa for a thousand bucks and then pay interest. Second hand stores are thriving.

[Ed Suspicious]

37. It's simple, really. The working poor buy based on monthly payment, not overall value. the

calculation is based on what they feel they can swing per month. They often overestimate this figure feeling as though they can eek out another 15 bucks per month if they have to. So it's easy for them to justify paying $50.00/month, that amount they can swing, but to come up with the $500 bucks the consignment shop is charging for the couch all at once is a road too far. The total spend is not even a factor in the cost benefit analysis. The only factor is much pain now or manageable drips of pain over the next 4 years.

[yeoman6987]

39. Well then I guess there's not much we can do for the

Except maybe putting a cap on the maximum interest a company can charge. Say 35 percent which is still a lot, but I don't think Congress would pass anything lower because some banks charge that much for credit cards especially with Clients with poor credit.

[Warpy]

77. Probably because people who are not poor snap up the good stuff

because they can afford to pay a lump sum instead of asking the store for layaway for a few pay periods so they can scrape it together.

Before Reagan, you could cruise better neighborhoods and find castoffs waiting for the garbage men with the large item pick up crew. I furnished my first few apartments that way in Boston. After Reagan, people couldn't afford to toss anything and either sold it at yard sales, sent it to consignment stores, or took a tax writeoff to give it to a charity.

Maybe you don't quite realize how poor "poor" really is these days. It is hideous. It means bad food, bad housing, payday loans, and ripoff "rent to own" places where you can lose everything if you get sick for a few days.

[w0nderer]

81. was about to make 'layaway' entry

have had that happen often when i ask for layaway -- "prefer a lump sum"

freecycle does help depending on area

[hfojvt]

87. it's only "punishment"

for people foolish enough to stick their hands in the rat traps.

These people are not just poor, apparently they are greedy, saying "I want this and I want that" even though they really cannot afford it.

Also, they apparently are math-challenged.

[moriah]

2. Many of those places offer "same as cash" deals, but their prices are already high even doing SAC.

Still, maybe a $1500 sofa isn't the best thing to get. I got mine from Craigslist for $150, and love the thing. It was still in their house and everything when I got it, had never been exposed to the elements, and no pets. I still sprayed it down with lysol and the bottom with roach scatter spray just to make sure I didn't see bugs coming from it before I bought it. Edit, genuine La-Z-Boy reclining sofa, recliners on both ends. I thought I got a great deal.

Next I'm looking at a mattress, from a place with a 90 day same as cash no credit check financing. I dunno if the $120 pillowtop is hard as a brick or if I'll end up choosing a more comfortable mattress, but I'm going to drive down there when I get my check next month and see what they have. But at least it won't have bedbugs.

[Adrahil]

6. Nothing comes for free, right?

Yeah... these "Same as cash" deals have risk and profit built in. Nothing is free in the business world.

[Jim Beard]

44. Many of the poor don't have the internet. Try trading places. It will really open your eyes. I

I'm not trying to be nasty just, I have been on both sides and at one time never ever really knew what it was like to be a poor adult, really poor.

[moriah]

91. You don't know me. How dare you say I've never been really poor as an adult?

Last edited Tue Oct 21, 2014, 10:26 AM - Edit history (1)

I'm doing better now, thanks to SSDI, but during the approval process I had no income coming in at all.

So yes, I have a clue, and have been there. I've also lived with an outhouse only and "indoor plumbing" for cooking and bathing rigged out of scavenged PVC. (Edit to add: from a well that was run by a hand pump that pumped water into two barrels in the attic of the shack, and had to be repaired with leather from one of my shoes that a dog had chewed the mate of.) I wonder if the Republican's latest inventory on how many poor households have this and such count how many have flushing toilets. Many in my state don't.

[hfojvt]

86. I have never bought a sofa

so I was wondering "who pays $1,500 for a sofa?" Even $1500 sounds like too damned much to pay, much less the interest rates.

[hifiguy]

3. I remember when this was called by its proper name of usury

and illegal.

[etherealtruth]

28. That is it in a nutshell! n/t

[Art_from_Ark]

83. They've been cracking down on payday loan usury in Japan

There was a class action suit a while back and now a bunch of payday loan companies have to make reparations to customers they ripped off.

[suffragette]

88. Well done Japan!

[Art_from_Ark]

89. Here's a web site that explains how people with loans can file a usury claim

http://www.folcieditore.com/

I often hear notices on the radio about filing a claim, and notices even pop up whem I am watching YouTube videos.

[Nye Bevan]

4. Nobody should be going to these places.

Save up and buy something used.

[name not needed]

7. And if that's not an option, find the nearest college town.

Drive around on move in day, you're bound to find somebody giving away furniture.

[moriah]

9. Wooden furniture, yes. Upholstered furniture or mattresses, I'm very very picky.

I hate bugs. Hates them, I do.

[mahatmakanejeeves]

13. Watch out for secondhand microwave ovens and coffee makers.

Those enclosed spaces are so nice and warm and dark. Open one up and watch the critters run for their lives.

[moriah]

15. Yep, got my coffee maker and microwave from Fingerhut, almost paid off.

At least it only was scheduled to take 10 months to pay off, not forever and 20 years.

[teacher mom7]

75. Goodwill treats upholstered furniture

so you don't have to worry about the sofa having bugs in it.
Also, I agree that the poor need financial education. Clearly the family profiled could make better choices, including not spending precious cash on ciagarettes, if they knew how.
I question the reporter for writing as if the family has no other options. She apparently did not want to seem harsh on the family by asking them why they do not go to thrift shops, and wanted to keep the focus on the busineses who prey on these low-income, and probably poorly educated, people, who, for whatever reason, do not avail themselves of them. Maybe, as other poster pointed out, the temptation to have new things is just too much for them. Also, they may have been rasied to think it is shaeful to buy things that are used. I personally buy almost everything at thrift shops and yard sales. For example, at Salvation Army, I bought a nice upholsetered sofa for less than $100, and a comfy armchair for about $25.

[customerserviceguy]

76. That's the key right there

The poor need financial education, big time. In my job, I see numerous poor people who opt to pay two bucks to use their debit card to pay their bill (we don't take cash) rather than just go a short ways down the street to buy a money order for less than a buck from the USPS. The vast majority of them have cars, so it's not like I'm suggesting they take an hour long hike.

Back in 1981, I started doing income taxes for people, and I was amazed at the simplest things (that I figured everybody knew) that my clients had no clue about. My folks were not very open about their financial situation, but somehow being able to do simple calculator arithmetic gave me a previously unknown advantage over other people. My tax customers benefitted from the things I taught them, and many grew financially more secure over the next decade.

It takes a lot more than just handing people money to make them have a feeling of financial well being.

[Warpy]

85. I was in Boston

I just made sure they'd been through a hard freeze.

I never caught anything from them, so it worked.

[moriah]

90. Not too many hard freezes down south. That does work, though. n/t

[dixiegrrrrl]

41. Do you know how how many urban poor have NO cars?

That is the reason you will find all the pawn shops, payday loans, etc in poor neighborhoods.
There ain't no driving around to spot treasures in other parts of town.
You take the bus or walk, and in both cases are limited by how much you can physically carry home from the store.
But Buddy's rent to own place, located conveniently nearby, will cheerfully deliver your over priced cheaply made furniture,
even set it up for you, and the cost is FREE. ( actually buried in the fine print of the monthly payback).

[Liberal_in_LA]

25. agreed. go to goodwill.

[Jim Beard]

45. I did

but I was a single person and didn't actually need a color TV.

[Adrahil]

5. A lot of these folks are in DESPERATE need of financial education.

My sister does that kind of shit. She buys stuff using credit cards, store credit and even at these "rent to own" centers. These things cater to the peoples' thirst for immediate gratification, to their own serious detriment. She can't understand why she's always in debt and never has any money for emergencies. When I talk to her about savings, she argues that she has no money to save.... and she's right. She has so many $10, $25, $50 bills she has to pay, she CAN'T afford to save. She's even still paying on things (like an XBox 360) that don;t even work any more. I've talked to her about "financial recovery" period to pay off some bills and then actually develop some savings, but she is just convinced that they can't do that (for whatever reason). I try to argue that if she can pay $700 over 3 years to buy an XBox 360, then she can afford the SAME amount over a year to buy it fro cash, but she won't listen. She has been conditioned by consumerism to want it NOW. And there are always vultures waiting to pick the bones clean.

It's depressing.

[mahatmakanejeeves]

8. If I were czar,

Last edited Sat Oct 18, 2014, 02:56 PM - Edit history (1)

I would make Home Economics mandatory in high school. Everyone, boy or girl, would know how to do some basic sewing and have some rudimentary (at least) financial skills.

[moriah]

14. If the xBox broke, instead of being stepped on or something, the rental agreememnt for it should....

.... cover a replacement for the purchase. About the only good thing about rent-to-own.

I won't buy electronics that way, even if I'm tempted. I have rented a washer and dryer before, when I totaled up the cost of moving into a great little townhouse with hookups but no w/d or onsite laundry compared to moving into an apartment complex with a w/d and realized it was cheaper to rent a set than to choose an apartment complex, and I worked 10 hour shifts so being able to was and dry my clothes at home was important. When I moved, I had them come and take the w/d away.

This place I'm in now doesn't have hookups, but has a nice onsite laundry. So I've just used it. Plus I have more time now.

[KingCharlemagne]

16. I think a lot of this can be traced back to the pent-up consumer demand following the end of World

War II and the slow demise of 'deferred gratification' as a civic virtue in the years that followed.

Something to keep an eye on: the resurrection of sub-prime lending in the automotive industry. I have been vaguely aware that it's growing by leaps and bounds but do not know whether the same types of shenanigans are being done by the financial industry in 'bundling sub-prime loans' and securitizing them and so on.

The next downturn in the business cycle - as sure as the sun rising in the East and setting in the West - may be amplified by the ripple effect of defaults in the sub-prime automotive sector. Probably won't be as severe as the crisis of 2008-09. One can hope, anyways.

[Adrahil]

20. Plus, we an inundated every day with advertising....

... that makes even poorer people believe that have to have it now, and they DESERVE to have it now. To go back to my sisters example, her family makes a decent way.... above the median anyway. Still, My family probably makes three times as much. Yet she ALWAYS seems to have the newest cell phone. She had a large flat screen TV 2 years before I did. They've already bought an XBone, even though they are still paying off the XBox 360. I, one the other had use credit only for emergencies and travelling. If it's something for play, we pay cash. I SAW what happened to my parents as they were swallowed by debt.

I dunno... I just don't get it!

[KingCharlemagne]

22. I've been called a "Spartan in the land of plenty" for my non-material

lifestyle (and, I suppose, my tendency towards self-denial). I don't watch a lot of TV and cancelled my subs to the two papers I read many years ago. So I may have thereby secured some sort of immunity to the charms of the advertisers.

My Dad grew up during the height of the Great Depression and I take after him. In my case, 6+ years in grad school on a measly assistantship taught me how to live from paycheck to paycheck. So I'm definitely an out-lier to the broad American experience.

I saw a great bumpersticker the other day: "The more you know, the less you need." That I suppose describes my philosophy or life principle.

[Adrahil]

31. Good for you!

You and my wife think alike! I am not an aesthete, I admit, but I do hate debt. Like I said, I saw it destroy my parents financial life. I never want to be there!

[Liberal_in_LA]

26. it's frustrating to deal w someone w that mentality

[ProfessorGAC]

10. This Confuses Me Greatly

When i was in business school, one of the case studies was the Rent-A-Center case.

It was held that the contracts were unenforceable beyond a certain point when the total value of payments unconscioniably exceeded the fair market price of the goods in question.

I can't find the case study folder i had, so it may be that usury laws were still stricter when that case happened.

But there is precedent that was supposed to prevent this.

And, paying 300% above fair market price seems unconscionable to me.

[One_Life_To_Give]

11. Company Store meets 21st Century

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store

[madville]

12. I've never bought furniture

Everything in my house is either scrounged, given from a friend/family or I built it (usually from repurposed materials).

My neighbor and I borrowed a trailer and got 40 nice free clean wooden pallets, I'm trying to think if a fun project for the wood now.

[logosoco]

27. Hve you been to Pinterest?

There are loads of things people come up with using pallets. It is cool, but it also sort of reminds me of how we don't make things here anymore to ship them. (Credit to James McMurty for that line).

I have two pieces of furniture in my house that were bought new!

[demmiblue]

70. Ditto the Pinterest suggestion.

Found this in less than 30 seconds:

[cbdo2007]

17. This article is full of things that don't make sense....

The interesting thing here, is that nothing listed here is something anyone "needs", they are all frivolous things that people want. If you can't afford a couch, don't buy a couch or find a used one on Craigslist for $20. Nobody needs an iPad, even people who can afford them, there are plenty of other things out there that do similar things for a fraction of the cost, most notably pen and paper.

It isn't just the poor either, I know a guy who can easily afford his 50" tv on his own, but he's renting it from Rent-A-Center because he will only be here for 2 years and doesn't want to have to worry about getting rid of it when he leaves. It would save him about 50% to just buy the tv and throw it away after 2 years, but he'd rather throw away the money. I'll never understand it.

[spinbaby]

18. That does make some sense

Might be a better choice to rent if they'll move it out in two years. We use Rent-A-Center to get a spare refrigerator one weekend a year for a big party. For about $100, they deliver and pick up.

[Adrahil]

21. Not if they could save money by buying....

I mean, why pay double to rent? Worried about getting rid of it? Call the local goodwill. They will be DELIGHTED to pick it up!

[cbdo2007]

23. Nope, still doesn't make any sense.

Your example has you renting something for less than you coudl buy it for...$100 for a weekend rather than buying one for $1000 DOES make sense.

Renting a 50" tv for $1,200 for 2 years when you could buy it for $600 doesn't make any sense to anyone, ever. You could give it to any goodwill (and it's a tax write off) or any friend or just throw it away. just leave it in the rental when you leave, I'm sure anyone would be happy to have it and would haul it for you, and with minimal effort you could probably even MAKE $300 for it.

[Politicalboi]

19. If you can't do the math

I remember seeing commercials for TV's for $29.00 a WEEK. That's insane. All for the up coming Super Bowl. $1,560 for a TV that today you couldn't give away. At least they're honest about the weekly rate. If you sign up for that, you've got to be crazy.

[linuxman]

24. This may sound harsh, but I don't really care.

Anyone stupid enough to buy anything (let alone something like an Xbox/Couch/iPad) from a rent-to own store is a fucking idiot, and beyond any and all help. How am I supposed to get worked up over someone signing their self into a contract for a $1,500 couch (which will be >4 grand when all is said and done) when they can go on Craigslist or to the Salvation Army?

[arcane1]

29. "Beyond any and all help"? Really?

[Cooley Hurd]

40. Compassion must not be their strong suit. ..

[leftstreet]

30. Would you care if your visa card charged 100% interest?

The issue in the article is (supposed to be) about high interest rates, not the choices low income people are faced with making

[linuxman]

42. Sure I'd care

That is, if I actually intended to ever use credit cards. And if they somehow make my interest rate go up to 100% from whatever stupidly high percentage it was, which they don't. The interest rates are right there for you to see, but the sort of people who simply have to buy a Lay-Z-boy right this damn minute probably aren't the sort of people who care about looking into that sort of thing, much less give a damn. Nobody put a gun to their head and commanded them to abandon common sense and adopt an unquenchable need for instant gratification.

[Adrahil]

33. Most these people have no idea what the actual cost is.

These folks really are in need of a consumer protection agency. This costs us, one way or another. People spedning that kind of money on a couch at a rent-a-center are probably also pulling food stamps, or other public assistance.

[NickB79]

72. The numbers are RIGHT THERE

"Only $29/week for 72 weeks!"

29x72 equals.......?

I could do that in my head. Even the cheapest cellphones have a calculator function. And then there's pen and paper.

[Adrahil]

73. Most of them aren't rally educated to think that way....

You and I do.... Many do not.... They just think about what their monthly bills are.

[laundry_queen]

74. It's hard for people

who weren't raised poor to understand. I wasn't raised poor, but I get it now that I'm a single parent of 4. There have been a few studies that show poverty changes the way your brain works. You don't plan for a future that you aren't sure exists. You are far more interested in the here and now. This can cause people to worry more about monthly bills than the total cost. Heck, when I bought my house, and they calculated the interest I will pay over the course of my mortgage, I nearly gagged but I knew it was a necessary evil, as I could not afford to pay cash for my house, and rent is even more money than my mortgage payment. I imagine that to many in poverty, they (like I did) have to block out the total costs of the interest and just worry about the current monthly payment and if that is do-able.

Another thing I haven't seen mentioned in this thread (although I'm not done reading it, so it could be further down) is that there is a huge stigma not just to being poor, but to looking/acting poor. People in poverty notice/feel how they are treated differently and probably are drawn to 'new' goods instead of used because they sense they will be treated better if they don't look/act poor. And they probably aren't wrong about that. People on this thread who DO buy used or get things for free and don't get why those in poverty don't do the same usually haven't been poor their entire lives and don't understand the different in treatment between rich/poor in the western world, and if they do understand, they have probably never felt the sting themselves. I think at the bottom of all this, is poor people don't want to be perceived and treated as 'different'. Having the same 'stuff' as everyone else goes a long way to bridge the gap in their eyes.

[delta17]

82. I agree with your second paragraph.

You see the same thing in the military as well. Lots of junior enlisted people have really nice cars they are upside down on, and high ranking officers drive 10 year old minivans and Camrys. There was even some pressure on new NCO's to upgrade to a full sized pickup or a sports car to look the part. You just didn't see this with officers, who made a lot more money.

[devils chaplain]

49. So less smart people can just fuck off and die. That's some kind of progressivism. n/t

[linuxman]

53. Why would they have to die?

All I'm saying is that I have no sympathy for a person who signs a contract of their own free will. None.

How can I be expected to feel bad for someone who is supposedly impoverished, yet insists on buying new furniture (let alone new furniture on credit)?

To be fair, I wouldn't feel bad for someone who stuck their hand under a lawn mower to see if it were running, either.

[Trajan]

60. What if your child stuck their hand under a mower ?

How about your neighbor's child ... would you have a milligram of sympathy then? ...

Some people really aren't very nice people ... kindness is foreign to their being ...

[linuxman]

65. We were talking about people

of an age who can take out a loan on furniture.

[Ed Suspicious]

62. You wouldn't? God, I'd feel horrible sympathy pains. I would go over and over in my head how that

one moment where they made a poor decision condemmed them to a lifetime of pain, suffering and setback. Yeah, I without hesitation can declare I'd cry for them. I wonder why you wouldn't.

[Trajan]

58. Yes ... it does sound harsh

Especially considering that those who partake of Rent-to-own may simply have not learned the math behind this swindle ... perhaps they could use some sage advice from someone like you .. as opposed of the back of your hand ...

[gollygee]

68. They're getting scammed

and sure it's easier to scam dumb people than smart people, but that doesn't make it the fault of the people getting scammed.

[gerogie2]

32. There is not much you can do to stop foolish consumers

When I was in the Army we would counsel soldiers that rent to own would cost you three times more then if you used a credit line loan or even a credit card to buy furniture. 9 out of 10 soldiers would still get their furniture at rent to own.

[upaloopa]

36. Many people are no good at handling money.

I think a lot of people have no idea what their bank balance is or how much they owe in total or how much they pay in bills each month.
The credit industry use to be the way you were told you can't afford something. People let the industry figure that out for them. The housing bubble grew on the fact that the credit industry stopped doing the math for people and just let them sign on the dotted line for payments they could not afford. These rent on own companies are the same.

[dixiegrrrrl]

43. I have agree with you on the handling money problem.

As you and others have said here, too many people do not want to deal with money, not even personal finance issues.
And that is why the banks are getting away with what they are doing.
The bank theft is SO convoluted, and rarely does it hit the news in language the Joe 6 pack can understand, and even if Joe could understand it he is so tired after work, if he has a job, that the info. washes over him and his family.
The jobless are too busy worrying about the next meal, and do not have the energy to sit down and figure out why bank invented derivatives are a problem for all of us.

Worse yet, the concept of introducing money matters in school is further and further away from reality as our schools seem to be turned into academic testing zones on the 3 Rs.

[tabbycat31]

38. This is where thrift stores need to start advertising

I furnished an apartment for $250 (the only thing bought new was the mattress) using thrift stores and giveaways. Granted I was there for a short period of time (and knew it), but with the $$ I bought a new mattress ($200, later sold for $150), a coffee maker, microwave (later sold for $15), easy chair (sold with the mattress package), lamp, and 4 TV trays (used as tables). Most I ended up giving away when I left, I didn't care about if I threw things out (I ended up recouping $165 through selling things to coworkers and I donated the rest).

My secret was half price Wednesday at Value Village where everything was 50% off a thrift store price. People need to stop being afraid of buying used. They had electronics there too. A (tube) TV could be had for under $10. They didn't have computers, but you can buy a low-end laptop for $300 new. Craigslist is also a very good source of electronics (when my desktop monitor died, it was replaced with one from Craigslist).

There are two of these rental stores near me and it's ridiculous. IMO rental furniture and electronics should be for very short-term (ie I need it for a party and then I will return it).

There should be laws stopping the usury, but I think diverting the poor to thrift stores would be a good first step that does not take government action.

[mahatmakanejeeves]

67. "... you can buy a low-end laptop for $300 new...."

Amazing, isn't it? Especially at back-to-school time and nearing the holidays, there will a big stack of them as you enter Best Buy, for example.

Thank you for writing.

[tabbycat31]

69. And you can get a used one cheaper off Craigslist

[formernaderite]

46. when I was a student I rented a sofa

with my roomates... it was easy but not cheap. When I got my first rental on my own, I went to second hand shops and thrift stores to buy furniture. In fact my wife still shops the thrift stores. My son furnished his entire apartment from craigs list.. including a sofa that was free if he picked it up.
I have no idea why someone would buy at a rent to own to own...
plus lot's of places have layaway again.
I realize there are lot's of uneducated people out there... but part of the problem is people wanting NEW

[Initech]

47. It's all designed to screw the poor and favor the rich.

Penny auctions? Scam. Rent-to-own companies? Scam. For profit colleges? Scam. For profit insurance? Scam. 25% interest on credit cards? Scam. Pay day loans? Scam. Title loans? Scam. I could go on and on. Fuck this shit.

[physioex]

50. Not that I disagree......

It might help to have basic financial education in our public schools.

[yeoman6987]

52. Well if they won't take our advice,

How will they ever become the top 5-10 percent? You know wisdom is a wonderful thing. A lot of us started at the bottom and dragged Ourselves kicking and screaming to a nice life. It was not easy and yes we started with second hand furniture or worse. We hand out our advice free of charge to anyone who is interested and desperately needs it. We don't have to you know. And this is an OP about the poor getting into tough financial trouble so of course we will give the poor the keys to financial freedom. We would be selfish otherwise.

[yeoman6987]

56. Lol. That was funny!

Nobody wants the poor to sleep in bed bug city. We just want them to save up for the new bed like those who save up for granite countertops. My kitchen redone last year for 25K was out of savings from a long time and not a rent to own business. I almost thought about going to Home Depot because they have a zero interest plan for 3 years. But I decided that paying it off immediately is responsible because what if something happens during that 3 years and I couldn't pay it off? Daily interest and now that kitchen is gonna cost 30K or worse. Everyone has the same troubles but on different scales.

[grasswire]

55. I wonder why dealers haven't thought of renting used cars in this manner.

Rent out a used car; pay three times what it's worth over several years.

[tabbycat31]

71. Subprime auto financing

I used to work for a collection agency. One of the accounts we had was a subprime auto lender who naturally sent lots of accounts to collections. (The cars have long since been repoed).

I remember when I had the accounts pulled up, the original loan agreements were scanned and we could view them. I did the math on the loans and never saw such a ripoff.

The example that I still remember was a loan for a 4 year old Neon. If every payment was made on time, the customer would have paid well over $25K for it (which it was not worth brand new).

[grasswire]

57. I wonder why dealers haven't thought of renting used cars in this manner.

Rent out a used car; pay three times what it's worth over several years.

[CK_John]

63. They do, its called leasing.

[grasswire]

64. but leasing requires a bit upfront cash payment, doesn't it?

can't attract the sub prime market with a big upfront cash requirement.

[Travis_0004]

79. Not always

And leasing isnt really a scam. Its not a good idea, but not a scam. There are also tax advantages to leasing if you own a business or are self employed.

[workinclasszero]

59. And we keep right on electing the same working class hating republicans

So they can make our lives a living hell on earth because....black man in the white house and my preacher who lives in a mansion and rakes in millions per year says what would ayn rand do?

Next time you see a broken down 15 year old car with bumper stickers on it read them and be amazed at how people can elect the destroyers of their own loved ones and feel righteous about it on the way to their cardboard shack by the garbage dump.

Propaganda works, especially if it is wedded to religion.

And I do blame the democratic party as well even though i do vote D of course.

Where is our FDR who would welcome the hatred of Fox noise, Hate radio and these money thieving mega church Randite preachers???

[madamesilverspurs]

61. Twenty years ago

when I went back to school I did a study on this subject. While doing research for one of my professors I came across an article titled "The Poverty Industry" and that article provided the impetus.

I was amazed to discover that there are those "entrepreneurs" who view the impoverished population as an eternal golden egg. Yes, there are those who are not adept at financial matters. But lack of fiscal acuity is not a moral failing; any moral failure accrues to those who take deliberate advantage. And taking advantage is the business model for these enterprises, a model in which the advantage is endlessly replicated.

Banks which would not open accounts for those with 'insufficient' income opened shops that cashed already meager paychecks, taking a percentage for the 'service'; many of these shops morphed into payday lenders. The oldest form of alternative banking, pawnbroking, fit into the scenario; it should be noted that the collateral basis of the loans actually gave the pawns the highest legitimacy ratings. The rent-to-owns are the newest, emerging as a market where retailing laws and regulations didn't apply.

Wealthy neighborhoods don't have these businesses on every corner. The farther you get from those neighborhoods the more pawnshops, rent-to-owns and payday lenders you see. In some places they are next door to each other, sometimes for blocks.

It seems counter-intuitive in the extreme, like shouting "there's gold in them thar empty pockets." But the bounty taken is indisputable, and the process makes more customers. And because we measure success with a dollar sign those who are enriched by these businesses are viewed as successful.

[AndreaCG]

66. Well said

I'm disappointed in those posters who sneer at the people who aren't educated enough to know they are being ripped off. The ones who call for better financial education in schools are right.

[Travis_0004]

80. There is no demand for those businesses in wealthy areas

If there was money to be made they would open in a wealthy area, but Im guessing they would quickly go out of business.

[sendero]

78. There is a combination..

... of ignorance and inability to delay gratification at work here. I suspect mostly ignorance, but who knows.

One thing for sure, if you manage your money in this way, you will always be poor.

[Vattel]

84. Part of the problem is that both democrats and republicans

refuse to pass serious credit reform legislation. The banks have the legal right to screw people over.