Hi everyone. J.G. Wentworth here.
When you need money, there are several options. Some of these include getting a bank loan, using credit cards, borrowing from your 401(k) plan and so forth. In this blog entry, I’m going to compare structured settlement funding to buying products through rent to own retailers. Rent to own retailers offer consumers low weekly rental prices on home furnishings and electronics, and ultimately, ownership of the products they rent.
Positives:
· Buying through a rent to own retailer is quick.
· Buying through a rent to own retailer does not require a credit check.
· You can purchase items at a rent to own retailer even if your credit is impaired.
Negatives:
· A rent to own store might not have what you need. Typically, these types of retailers have a lot of home furnishings and electronics. If you need to refurnish your home after a fire, great! If you need construction materials for home improvement, or need to hire a contractor for home improvements, or need to pay tuition, or buy a car, the easy credit offered by rent to own stores will not be helpful to you.
· The financing costs associated with rent to own payment plans can be prohibitive. According to the Consumers League of New Jersey, a non profit, consumer advocacy group formed in 1900, effective interest rates can be more than 250%. Typically, they say, a rent to own store will double the cost of goods sold on credit. Then they will charge interest during the life of the payments, in addition to other fees for insurance, application, delivery and late payments.
Compared to Selling Structured Settlement Payments
Even if you could get what you need at a rent to own retailer, selling structured settlement payments might be a better option. Here’s why:
· The discount rates associated with selling structured settlement payments is much, much lower than the financing costs of most rent to own retailers. In fact, the discount rate on the sale of structured settlements is now below the interest rates charged by most credit card companies.
· The sale of structured settlement payments provides you with cash, which you can spend anywhere you like on anything you need.
· Since you are not creating future payment obligations when you sell structured settlement payments, there are no regular interest and principal payments to make.
· When you sell structured settlement payments, the relationship between buyer and seller is clearly spelled out and approved by a judge.
· There are generally no tax implications when you sell structured settlement payments, whereas when you buy products through rent to own retailers you will likely pay sales tax.
A rent to own retailer can get you some of the things you need delivered to your home in a very short period of time. Maybe even tomorrow. And because of this, you can enjoy what you need much more quickly. However the financing costs are much, much higher with rent to own retailers, and if you are short on funds to begin with, spending it on unnecessary interest costs may not be the wisest course of action.
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