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Travis Benson of Rochester, New York purchased a color TV a few years ago, as did his cousin, David. Travis paid a total of $1014 for his set, while David, who lived in Cincinnati at the time, paid only $291 for the exact same appliance. Why the major difference? Travis bought through a RTO store, or Rent To Own, while David got his at a department store in the mall. Both bought "over time" and were able to take their purchases home immediately.

Rent To Own (RTO) stores have been at the center of controversy for some time. In fact, consumer advocates and RTO industry leaders continue to debate consumer protection legislation in the RTO arena. Their sales tactics and interest rates have come under scrutiny both at the state and national level. A large consumer group found in a survey conducted in 1997, RTOs charge interest rates that average one hundred percent and they often fail to disclose those interest rates.

The industry, on the other hand, has claimed it's exempt from the lending laws which protect other consumers who buy goods on time. A number of states don't consider rent-to-own agreements a credit-related transaction, but rather money a person pays is for the right to use the merchandise.

Also at issue is their target markets. The Better Business Bureau claims the RTO industry markets itself to the poorest forty percent of the U.S. population, a statistic the rental industry says is untrue. This is the segment of the population with the fewest purchasing options and a group which may have the greatest difficulty understanding the complicated terms of their RTO agreement.

The industry counters by saying they fill a need, where one obviously exists. Without them, this segment of consumers would have even fewer options. Because many RTO customers are troubled financially and some have declared bankruptcy in the recent past, the often advertised "no credit check" policy proves hard to resist. Generally, RTO retailers appear unconcerned about credit worthiness or income, unlike other retailers.

The RTO business, which is over 40 years old, produces about $4 billion in revenues for the industry, serving several million consumers, according to the Association of Progressive Rental Organizations, the industry's trade association. Nearly any household item, such as furniture, stoves, refrigerators, stereos TVs, even dishes can be purchased in this manner.

Consumer advocates say because no federal law requires RTO dealers to disclose their usurious interest rates, consumers who rent-to-own don't get enough clear information to make a wise purchasing decision. Banks, credit card companies, retail stores and others must inform consumers of the interest rate they charge. But the RTO industry is free to advertise inviting claims of microwave ovens for only $8.99 per week, with immediate possession. Regardless of the small payment amounts, this could easily mean interest rates up to 200 and 300 percent.

So, do rent-to-own transactions ever make good sense? Yes, in some instances. 1) If you only expect to live in an area for a short time, it could be cheaper to rent than ship your own items. 2) If you are starting a small business or are self-employed, renting all necessary office equipment and furniture could be cost-efficient. 3) When you absolutely must have certain items for daily living, a stove or refrigerator for example. Eating out all the time would prove even more expensive than renting the appliance. 4) If you are separated or going through a divorce, and it will be a short time before you receive your possessions under the divorce agreement.

If you are considering an item at an RTO store, ask many questions.

* First, is the item new or used? Although the industry claims it provides all the disclosures consumers need, in the survey mentioned earlier thirty-seven percent of items had no clear markings as to "used" or "new."

* What, if any is the cost of insurance or other services in addition to the basic weekly or monthly fee?

*Are there penalties for terminating the contract early?

*What is the policy for late payments?

Before choosing an RTO transaction, be certain you have considered all your options, including applying for credit from a merchant or borrowing money from a bank or credit union. Is it an item you must have immediately, or could you hold off and save until you can pay cash? Have you investigated the possibility of a lay-away plan?

It's a good idea to comparison shop between RTOs, as you might find a better deal elsewhere.

Make sure all the terms of the rent or sale are in writing. Don't just take the salesperson's word about policies and details of the rental agreement. Finally, don't sign on the dotted line until you know the exact price you'll be paying.