By Vanessa Papas
Alec Baldwin’s kitchen is polished with stainless steel appliances and tufted stools at the counter. Andy Cohen’s New York duplex’s master bedroom features a Ralph Lauren bed and custom nightstands. Gordon Ramsay’s dining room is fit for a world-class chef with a long wooden dining table that seats 16 people. While a peep inside the homes of celebrities can spark a desire to revamp your appliances and furniture, not all of us earn a Hollywood salary.
“In these challenging economic times, people are under pressure to keep tightening their household budgets. And woe betide anyone who needs to replace a broken appliance or TV set. Buying any of these items on credit might seem like an ideal short-term solution, but it is far too easy for debt to spiral out of control,” says Rami Sassen, CEO of Teljoy. “Rent-to-own (RTO) model has been designed to overcome this problem. It is all about giving South Africans the freedom to control how they spend their money and on what. Furthermore, it revolves around choosing when to buy, upgrade, or cancel without any contractual commitments. Rami examines why renting appliances, electronics and furniture sometimes makes better sense than buying:
Buying On Credit Means You’ll Have To Pay Interest: Our monthly premiums are impacted by the interest rate. So, if the Finance Minister increases it, so too will your premium go up. And if you should lose your job or take a pay cut in the future and cannot afford to meet the payment terms, you risk getting a negative credit score. RTO means just one monthly repayment that is not tied to any contract, you can pick any appliance, TV set, laptop, computer, furniture or even baby goods without having to get into debt.
What Is The Advantage Of RTO?
The absolute freedom to upgrade, downgrade, or cancel at any time. So, if you get that long-awaited salary increase, instead of forking out thousands to buy a new TV, you can increase your monthly premium by a few rand and get the latest model around. Similarly, if you would rather downgrade to free up some of your budget, then you can do so at any time. It really gives customers complete control.”
What Is RTO? Rent-to-own is an option for buyers who simply can’t pay for items the traditional way. That’s because you either lack enough cash or your credit score isn’t strong enough to be approved for the item. It is a legally documented transaction where one can purchase home appliances ‘on rent’ – in other words – in exchange for a weekly or monthly payment. The customer has the option of taking ownership of the item after a certain number of payments have been made. In other words, each rental payment is applied toward the sale price of the goods. An RTO transaction involves a short-term rental contract that can be terminated or changed at any time.
What Should I Look Out For When Renting Appliances? Reputable companies should offer free delivery of the product and set up free of charge. If you purchase a TV, for example, the licence should be part of the price you pay, so there should be no more annual fees to worry about. A maintenance plan and risk cover should also be included, giving you the peace of mind that should the worst happen, your appliance can then be replaced.
What Products Are Best Rented-To-Own? Appliances like air conditioners, dishwashers, fridges/icemakers, microwaves, sewing machines, stoves, tumble dryers and washing machines
Electronics such as cameras, cellphones, gaming (PS4, Xbox, Pool Table, Table Tennis) Laptops/Notebooks, decoders, sound systems and televisions, as well as furniture like bedroom suites, coffee tables, couches/ recliners, dining room suites, lamp/ side tables, patio furniture and TV Stands.
Can My Application To RTO Ever Be Rejected? Yes. When renting to own you will need to provide a copy of your ID/passport document, one month’s bank statement (some RTO companies insist on up to six months statements) and your latest payslip. One of the main reasons for an application being rejected is due to your personal bureau score falling below our minimum requirement. Most companies offer the option to cancel the contract but there are penalties for this, so it’s best to always read the fine print.
When Can I Take Ownership Of The Product/S? This varies by product category and RTO companies, however, you should expect to exercise your option to own after 36/24 rental payments.
The Rent To Own Concept
By Vanessa Papas