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ABCO Rent to Own and the Interest Rate

I wanted to comment on the rent to own option that ABCO offers customers. We often receive comments about how high the interest is and I wanted to clear the air a bit about this and help educate people on the rental program and tell them how we handle it. The reason that the interest is so high is because there is no credit check. Here at ABCO of Sahuarita, we are very transparent about the high interest and always let people know how much it is up front.

First off, let me describe the rent to own program. It is a 36 month lease and there is no credit check. This means that it is not like conventional bank financing. It is actually financed by a third party rental company (ABCO Rentals). The rental company is not required to report to the credit bureau. In other words, the rent to own will not impact your credit unless of course, you fail to pay the company and are sent to Collections. In addition, there is no pre-pay penalty which means that you can pay off the loan at any time without penalty. As discussed below, it is actually advantageous to do so. To get a quick check of the interest, multiply the monthly rent times 36. This tells you how much more you will be paying than the purchase price of the building.

Why is the interest so high? The reason is that the rental company is taking on increased risk because they are not performing a background credit check. It is very costly to repossess the buildings if someone decides not to pay. There is also the risk that the building will be damaged and require repairs or they won’t get the building back should someone decide to hide the building or move. How high is the interest? If you make the minimum down payment and pay for the full 36 months, it is about 45%. Yes it is very high. This can be reduced dramatically by paying more down up front and paying off early. Depending on the size of building, the best way is to pay a $1,000 to $1,500 down and then pay off in 3 to 6 months. Keep in mind that if this is not possible, at least the amount is spread over time. For some people this is the only way to get storage relief. Rather than put up all their cash up front, they are spreading the cost out over time in relatively small payments. It also allows them to use their hard earned cash for other necessary living costs. Please realize the rental company is not doing this for free. No company works for free. There will be interest regardless how early you pay it off and how much you put down. The only way to completely avoid the interest is to pay the purchase price for the building or the “cash” price.

Options for payment. We always give customers multiple options to pay for the buildings, not just the rent to own.

  1. Pay the advertised purchase price or “cash” price. ABCO does require half down up front and the other half on delivery. This is the only way to avoid all the interest. We accept credit card, check or cash for the down payment and check or credit card at the time of delivery. 
  2. Get a building loan or signature loan from your bank or credit union of choice to pay for the building. For those with good credit, this is an excellent option to lower your interest and payment amount.
  3. Rent to Own- to avoid the most interest, pay $1,000 to $1,500 down and then pay off the balance in 3 to 6 months. There is no penalty for doing so. Call us or come in and see us and we will calculate the payoff amount that you will owe at the time you decide. Hope this clears things up a bit.

Thank you to all our awesome customers out there!

We do appreciate all you’ve done for us. God bless all of you.

Colby Fryar
16115 S Three Wells Ct.