Rent-to-Own True Cost Calculator
Reveal the real cost of a rent-to-own agreement: total paid, markup over the cash price, and the effective interest rate baked into the payments.
How it works
Total = payment × count · Markup = total − cash price · Effective APR: solve cash = payment × [1 − (1 + i)⁻ⁿ] ÷ i, then APR = i × periods per year
Rent-to-own advertises small, frequent payments and no credit check, which hides how much the item ultimately costs. The true price is simply payment times the number of payments, and the gap over the cash price is the markup. To compare it against ordinary financing, this calculator solves for the interest rate that makes those payments equal the cash price — the same annuity maths a bank uses — and annualises it. For furniture and electronics that rate is frequently 100% or more, which is why paying cash or saving up first is almost always cheaper.
Worked example
A TV with a $600 cash price rented at $40 a month for 24 months costs $960 — a $360 (60%) markup. Solving the annuity for the monthly rate that turns those payments into $600 gives about 4.16% a month, an effective APR near 50%.
Frequently asked questions
Why is rent-to-own so expensive?
You pay for convenience, no credit check and the store’s risk. Spread the markup over the short payment schedule and the effective interest rate is often triple digits — far above a credit card or personal loan.
Do I own the item during the agreement?
Usually not until the final payment. Miss payments and the retailer can repossess the item, keeping what you have already paid. Read whether payments build equity or are pure rental.
Is there a cheaper alternative?
Saving up and paying cash avoids all the markup. If you need it now, a low-rate credit card or a small personal loan almost always beats rent-to-own, even accounting for interest.
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Educational estimate, not financial advice.