Furniture payment plans and rent-to-own: what to ask before you sign

Paying for furniture over time goes by a lot of names: rent-to-own, lease-to-own, payment plan, in-house financing. They are not all the same kind of agreement, and the difference matters if money gets tight. Here is how to tell them apart, and what to ask at any store, including ours.

Three kinds of agreement

Rent-to-own, also called a rental-purchase agreement. You rent the item, usually by the week or the month, and each payment renews the rental. You are generally not required to keep renting, and the item becomes yours when you have made every payment. Until then, the store owns it.

An instalment sale. You buy the item on day one and agree to pay for it in a set number of payments. It is yours from the start, and you owe the full amount even if you change your mind.

Lease-to-own through an outside company. A separate company buys the item from the store and leases it to you. Your agreement is with that company, not the store, and its terms are its own.

A store's sign or website will not always tell you which one you are being offered. The written agreement will. Ask before you sign.

What it costs

With any of these, the total you pay over time is usually more than the cash price. That is the trade for not needing the whole amount today.

So ask for two numbers in writing: the cash price, and the total of all the payments. Put them side by side. If a store will not give you both, go somewhere else.

Eight questions to ask before you sign

1. What kind of agreement is this, and who is it with?
2. What is the cash price?
3. What is each payment, how many are there, and what is the total?
4. When is each payment due, and how do I make it?
5. What happens if a payment is going to be late?
6. If I cannot keep paying, can I return it, and what would I still owe?
7. Can I pay it off early, and what would that cost?
8. Is the item new?

A store that deals straight will answer all eight without changing the subject.

Will it build my credit?

It depends on the agreement and on whether the company reports payments to the credit bureaus. Many do not. If that matters to you, ask directly.

Paying over time at Big Ben Furniture

We have two ways to pay over time. Our in-house plan is a lease-to-own agreement with no credit check. If the in-house plan isn't a fit, we also work with outside companies. Their option includes a soft credit pull.

Here are our answers to some of the eight questions for the in-house plan:

• What kind of agreement is it? Lease-to-own, with the store. You own the furniture once the agreement is paid in full.
• When is each payment due? Your first payment is due when you sign. After that, payments are set to your payday, every two weeks or monthly, and taken automatically from the debit card on the account your pay goes into.
• What do I see before I sign? We go over a sheet with you in the store that lays out the number of months, how often you pay, and your first due date.
• Can I return it? Yes, at any time, without a penalty. Each payment covers the time until your next one is due.
• Is the item new? Almost always. Now and then a piece has been owned before, so ask about the one you like.

For the cash price, each payment and the total, ask us about the piece you're looking at. You can ask us all eight questions above.

You can also pay in full and take it home. Customers call it cash and carry.

Applications are done in the store at 2121 N Foster Dr in Baton Rouge. See what to bring, or call (225) 356-0068.