Rent-to-own trailers: what it really costs

The most expensive way to buy a trailer from us is rent-to-own. We offer it anyway, and we still recommend it to certain people, because for them the alternative is not a cheaper trailer. It is no trailer, and no work. But the cost is real, it is large, and the worst thing we could do is let somebody discover the size of it in month fourteen. So here is the whole thing, numbers included.

You are renting it, not buying it

Start here, because this is the part most people have wrong when they sit down. A rent-to-own agreement is not a loan and it is not a credit sale. It is a rental with a purchase option. You lease the trailer month to month from a rental-purchase company, and that company owns it until the day it is paid out. We hand you the keys. The title does not have your name on it yet.

That ownership is not a technicality. It shapes the whole agreement:

• The trailer is the rental company's property until you finish paying. The agreement carries fees for pick-up, redelivery and reinstatement, which tells you plainly enough what happens if the payments stop.
• You insure it, in your name, with them named as loss payee.
• They fit a GPS unit to it. It is their trailer and they keep track of it.
• The lease renews with each payment instead of locking you into a fixed loan term. You can return the trailer and stop. What you have already paid does not come back to you.

You also sign with the rental-purchase company, not with us. We sell the trailer and hand it over; they own it and they bill you. Their name is on the listing page and it will be on the paperwork.

What it costs, on a $12,000 trailer

Rent-to-own is priced as a multiple of the cash price, and the longer the term, the bigger the multiple. No hedging: here is a trailer we would sell for $12,000 cash, at every term the program offers, at the 6 percent Greenville sales tax rate.

Read the bottom row twice. Spread that $12,000 trailer over five years and the rent adds up to $28,800. You pay for the trailer two and a half times over. The twelve month plan is the cheapest of the five and it still costs a third again on top of the cash price.

Watch the two ends of each row move against each other. The monthly falls with every longer term, and the total climbs to pay for it. That is the whole trade, and it is why we push people toward the shortest term they can genuinely carry rather than the smallest payment on the sheet. A payment you can just barely make is not a bargain.

The gap between the rent column and the one beside it is sales tax, which is charged on the rent and on nothing else, never on the deposit or the fees. The table uses the 6 percent Greenville rate. Yours depends on your county, and a number of South Carolina counties add a local option tax on top of the state's six percent, so a Spartanburg or Anderson customer pays a little more per month than the figures above. Every trailer listing on this site has a county picker in its rent-to-own panel that re-runs all of it at your own rate.

The money you bring on day one

There is no percentage down payment. Not ten percent, not fifteen, not any figure, and we would rather say so here than have somebody show up with the wrong amount of money. What you actually pay at signing is a defined list. On that same $12,000 trailer, on the 36 month term:

The deposit is the line to look at twice. It scales with the price of the trailer: 3 percent at $8,000 and under, 7 percent from there up to $15,000, and 9 percent above that. It is calculated on the full price whatever else you do, and it is not a deposit in the sense a rent deposit is. The paperwork calls it a non-refundable fee, and it is not credited against your payoff. Count it as money spent.

You can put money down if you want to, and it does something useful: the rent is worked out on the price minus your down payment, so every dollar down comes off the monthly and off the total. It will not shrink the deposit. The only time money down is required is on a trailer priced above what the rental company will fund on one agreement, which is $20,000. Above that line the difference is due at signing, and it is a dollar figure for that trailer, not a percentage.

Paying it off early is the best move available to you

This next part is worth more to you than anything else on this page, and almost nobody asks about it at the counter.

You can buy the trailer outright at any point. You do not owe the remaining rent in full when you do. You tender a discounted share of it, and the discount is fixed by the term you chose: 15 percent off on a twelve month agreement, 20 percent at twenty-four, 25 at thirty-six, 30 at forty-eight, and 35 percent off on a sixty month agreement.

Work that through on the sixty month row above, in rent before tax. Run it the full five years and the rent totals $28,800. Take the identical agreement and pay it out after eighteen months instead: you will have paid $8,640 in rent by then, and the buy-out is $13,104, which puts you at $21,744 all in. Same trailer, same contract, one phone call, $7,056 less. The deposit and the fees are spent either way, and the discount applies to the scheduled rent only.

So if you take a long term because the low payment is what gets you started, and the work goes the way you are hoping it will, call them and pay it out. Do not just keep making the comfortable payment for five years. The comfortable payment is the reason this costs so much.

Who this is genuinely for

Someone who needs a trailer to earn, cannot get conventional financing right now, and would otherwise go without one. A landscaper in his first season with no business credit behind him. Somebody rebuilding after a rough couple of years. A one-truck hauler whose old trailer has finally given up and whose work is not going to wait for a bank. If the trailer starts producing income the week you tow it home, an expensive trailer that earns beats a cheap trailer you cannot get.

It also suits people who could qualify but would rather not have their credit pulled or the debt on their report. No traditional credit check is required for rent-to-own, which is a genuine advantage for some buyers, and the price above is what that advantage costs.

When you should not do this

If a bank or a credit union will write you a loan on that trailer, take the loan. Even a rate you would grumble about beats 1.73 times the cash price by a wide margin. Apply somewhere first and come back to rent-to-own only if the answer is no. You can start with our financing application, and no hard feelings on our end if it works out and you never need this page again.

If you can pay cash, pay cash. It is not close.

If the trailer is for weekends and hobby use, wait and save instead. Paying two and a half times for something that will not earn its keep is a bad trade no matter how easy the approval is.

If the payment already looks tight before the trailer has hauled anything, this is not the answer, and a longer term to shrink the payment only makes the hole deeper. Consider a smaller or a used trailer you can actually cover, or come talk to us about what would work at a price you can hold.

We give people this same advice at the counter, including when it costs us the sale. A customer who feels taken does not come back for tires, service, or the next trailer.

The rest of the terms, plainly

• Payments are monthly with a ten day grace period. After that the late fee is $4. A returned check is $25.
• Terms offered are 12, 24, 36, 48 and 60 months. The sixty month term is only available on trailers priced over $10,000.
• You keep insurance on the trailer for the life of the agreement.
• The trailer is titled to the rental company until it is paid out, so it is worth knowing how South Carolina handles trailer titling and registration either way.

South Carolina has its own rental-purchase law, and two of the things it requires are useful to you. The agreement has to state the total of scheduled payments, and it has to say in plain words that you will not own the trailer until you have made all of them. Both of those will be printed on the paperwork in front of you. Find that total, read it, and if it is not the number you were told, stop and ask why before you sign.

Bring us the awkward questions

We would rather sell one trailer properly than sell one somebody resents by spring. If you are weighing rent-to-own against saving for another four months, tell us the numbers and we will tell you which one we would do. If you are trying to work out whether a 7x14 dump or a 6x12 utility is the right tool for the work you have lined up, our guides on picking a size and payload capacity will save you a mistake that costs more than the financing does.

Every listing on this site carries a rent-to-own panel with real figures for that exact trailer, including your county's tax, so you can run the numbers at eleven at night without talking to anybody. When you want a person instead, we are in Greenville right off I-85, or you can get in touch here.

Sources

• S.C. Code of Laws Title 37, Chapter 2, Part 7, Consumer Rental-Purchase Agreements (Section 37-2-701 and following)
• South Carolina Department of Revenue, chart ST-500, South Carolina Local Tax Designation by County