Hi all.
As with the previous post on what a credit card loan looks like, I will give you an explanation of rent to own without the jargon.
Imagine that you rent your laptop valued $2,000 to your friend, who I’ll call Mike, at 40 dollars per week. He must pay you that each week, or he will lose the laptop. If he pays it off, he gets your laptop.
How many weeks will it take for Mike to pay off the loan? $2,000 / $40 = 50 weeks.
Imagine that you have 5 other friends you have the same deal with. How much money do you get in a week, given that there are 6 people you have the same deal with? 30 dollars.
Now, for Mike’s individual loan, let’s see how much money you get from the deal. You effectively get 104 dollars out of each 100 dollars that he gives you. He pays you only 80 cents per week for the laptop, coming up to a total of 40 dollars over the life of the loan. You get an extra $1,960!
