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Where rubber meets the road maybe not the best place to rent

The old saying goes that necessity is the mother of invention. How that adage has manifested itself in the consumer affairs sector in Texas and elsewhere is through the alternative financing industry.

What that can mean for someone in a tough money situation is access to goods on a rent-to-own basis. The typical ad for such services often goes something like; "Bad credit? No problem!" The upside if the model is that the consumer gets what they need. The downside is that they usually pay a massive premium for the privilege. 

Readers are probably familiar with the furniture and electronic equipment rental vendors who operate in this arena. One that is perhaps newer on the field but apparently gaining a foothold is the rent-to-own tire shop. For those who don't have the wherewithal to pay for a set of replacement tires outright, the option is there to rent. The cost-benefit of such arrangements deserves careful scrutiny.

Take for example the case of one couple out of North Carolina. She is a nurse. He is a prison guard. One might think that with their combined income they'd be able to handle replacing the tires on their 15-year-old van. But when that time came recently, with their existing tires literally threadbare, they couldn't. So they opted for a rent-to-buy situation.

Under terms of their agreement, they pay only about $14 a week for the set. But over the life of the contract they will wind up paying nearly $1,000. The couple is well aware they are paying much more, but they say they really didn't have a choice.

Whether that's true or not is debatable. Debt relief is available in a number of different ways, including through Chapter 13 or Chapter 7 bankruptcy and deserve thorough examination.

This becomes especially important where rent-to-own deals are in place. The fact is that such contracts are typically not subject to discharge under bankruptcy. The only option then may be to pay the buyout price or risk having a vehicle that is on blocks and going nowhere.

Source: TheDay.com, "Economy-minded drivers turn to tire rentals," Ken Bensinger, Los Angeles Times, June 30, 2013

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