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Should I Lease-to-Own An Engagement Ring?

Benefits and pitfalls of lease-to-own options for purchasing your engagement ring Lease-to-own options to purchase your engagement ring can work, but make sure that you fully understand the terms, payment schedule and 90-day purchase option or else you can ending paying more then double the retail price.

Don’t have the savings to pay upfront for an engagement ring, and don’t have good credit to make such a large and important purchase?

You may find yourself looking into lease-to-own options.

Lease-to-own companies allow buyers with poor credit to take home big-tickets items and pay them off gradually. These buyers make regular payments based on the price of the item and the company’s leasing fee. Eventually, they can own the item they lease.

The lease-to-own (or rent-to-own) model has a bad reputation – often, for good reason. If you don’t read the fine print (or if no one shows it to you), you can end up paying two or three times the retail price.

Here are the benefits and pitfalls of buying your engagement ring using a lease-to-own option:

The Lease-to-Own Model

You’ll never hear the words “loan,” “financing,” or even “interest” when it comes to lease-to-own options.

That’s because they’re prohibited from saying them.

All states have usury laws prohibiting finance companies from charging above a certain interest rate, or APR. That’s why the highest interest rates on retail credit cards still usually hover between 25 and 30 percent.

Lease-to-own companies skirt these regulations by structuring the agreement as a lease rather than a loan. Instead of charging interest they charge “leasing fees”.

By distancing themselves from the world of financing, these companies can hit consumers with sky-high leasing fees without any legal pushback. For example, buyers who lease through popular lease-to-own company Acima will pay double the purchase price by the end of their payment plan – that’s the same as a 200% APR!

Let’s break this down. Say you bought a $1,000 ring through Acima. You’d have the option of making:

  • 12 payments of $170, or a total of $2,040
  • 26 biweekly payments of $78, or a total of $2,028
  • 52 weekly payments of $39, or a total of $2,028

No matter what you choose, you end up paying more than $2,000 for a $1,000 ring. This also assumes that you make all your payments on time, as late fees and returned payment fees will simply add to the total you’ll owe.

How to Come Out On Top

Despite the shady backstory, the lease-to-own model isn’t always bad news.

All lease-to-own options offer a 90-day purchase option, allowing customers who pay the original purchase price (plus an upfront leasing fee) within 90 days of purchase to own the item without paying any leasing fees. As long as you pay off your entire balance within the 90 days, you’ve theoretically secured free financing.

There are two potential problems with this approach.

One is that you still end up paying more than the purchase price. For instance, if you bought a ring through Progressive Leasing and paid it off in 90 days, you’d still be charged a $49.99 leasing fee up front (equivalent to 20% APR on a $1,000 purchase).

The other is that these companies do not make a profit (and likely lose money) if customers successfully complete the 90-day purchase option. This creates an incentive for the companies to obscure the terms of the lease.

Naturally, these practices lead to many unsatisfied customers. According to a Consumer Affairs review, it took one customer more than half an hour to get a straight answer about the amount of leasing fees that would be applied to her purchase.

Other consumers reported that the company misrepresented the number of monthly payments, continued charging for returned merchandise or failed to inform them of the 90-day purchase option.

Sometimes, these issues stem from simple miscommunications. When retail stores partner with lease-to-own companies, employees on the floor are often not trained well enough to fully explain the leasing requirements and payment options. Furthermore, in their push to make the sale, they may steer customers into lease-to-own arrangements without fully explaining the terms.

If you choose to lease your engagement ring, make sure that you fully understand the terms, payment schedule and 90-day purchase option. If you are unable to pay the original purchase price within the first 90 days then be prepared to pay more than double the retail price.

A Word of Caution

The most prominent companies in the lease-to-own industry are Progressive Leasing, Acima, Snap Finance, Zibby, Future Pay and SmartPay Leasing.

Progressive Leasing, the largest player, was acquired by Rent-A-Center in 2014. While this doesn’t mean that Progressive Leasing employs the same business practices as its parent company, it’s worth noting because of Rent-A-Center’s reputation for harmful clerical errors and aggressive collection tactics.

A 2017 NerdWallet investigation revealed a widespread pattern of bookkeeping mistakes that often led to inaccurate balances, lost payments and faulty credit reports.

The report also uncovered thousands of complaints against the company filed at the state and federal levels. Many of these complaints dealt with Rent-A-Center’s intimidating collection practices, which allegedly included breaking into renters’ homes, calling renters at work and threatening legal action.

Although Progressive Leasing is distinct from Rent-A-Center, this lack of corporate accountability should make us wary of the lease-to-own model. An incorrect statement or, worse, black mark on your credit history can quickly turn a rental agreement into a huge source of stress and financial hardship.

Alternate Options

If you want to finance an engagement ring, check out some alternate options before entering a potentially costly lease-to-own agreement.

The financing plan offered through Gage Diamonds doesn’t require good credit, doesn’t charge interest or fees, and doesn’t mask interest under any other names. What you see at checkout is always what you’ll pay. If you have a checking account in good standing, steady income, and few overdrafts – you’ll have a good chance of getting approved.

Gage makes profits by buying fine jewelry wholesale, then selling at retail value. That means there’s no incentive to charge exorbitant interest rates or leasing fees to make money. You pay the price of your engagement ring – and nothing more.

Additionally, Gage is sister companies with their financing partner, so employees are well versed in the terms of the loan. As you shop, you can quickly get the facts about your financing options.

If you are interested in financing your engagement ring, wedding ring or other fine jewelry, please visit our financing page to learn more and apply.