Wednesday, January 31, 2007

Debt-to-own

The Buffalo News is reporting that the State Assembly has been considering a bill which would attempt to put some controls on the rent-to-own industry. Currently, the industry is accused of engaging in practices which inflate the cost of goods and result in low income consumers making significant payments under threat of immediate repossession without accruing any equity in the item. The industry responds that higher prices are required due to the risk they are undertaking in serving their target population and the additional expenses they face.

2 Comments:

Blogger buffalo estates lawyer said...

Pretty accurate description. Typical. The least able to pay, pay the most. Yet, the risk to these companies is high. Although, I must say, if the reward wasn't outrageous, as it is now in its unregulated environment, then no one would be doing it. So out goes the high risk justification.

Ever notice how many of these stores are in black neighborhoods or other really low income areas? Connection?

1:32 PM  
Anonymous Dee said...

I agree with buffalo estates lawyer. Those companies are making tons of money.

Certainly, there are many of these places in really low income areas. But I also have also noticed them cropping up in other areas (not well off, but better off). Today is a time of instant gratification--where people starting out used to raid parents, relatives and friends attics and basements for castoffs they could use for a while, today they often want everything new and matching. No saving up to get something--many just want it now, no matter what the cost in the end.

In addition to regulation of these businesses, we also need to help those looking for instant gratification that there are other options,

12:31 AM  

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