DRIVERS ONLINE

Aaron�s is a particularly well-known and successful example of the �just a few easy payments!� method of ownership. You pay the store a monthly payment for a set period of time; say, 12 months--and it�s yours! You take it home, use it, live in it...and, at first blush, this may seem like a good idea--particularly for expensive stuff that you don�t want to purchase up front, like living room sets, TVs, fridges, and so on. You pay a seemingly reasonable rate for a few months, instead of dropping over a thousand dollars all at once. 

But it�s really an insidious way to make more money off of unsuspecting consumers.

I assure you, this isn�t a charitable service. Aaron�s, and all companies like them, are in business to make a profit. And, in this case, they make obscene profits on some pretty ordinary stuff! Some customers assuredly do not make every payment--hence the jacked-up prices, which I will detail next. But why should you and I have to pay extra to cover for some deadbeat�s inability to pay what he owes? 

In my post on the Wal-Mart trap, I explained that it pains me to see a price of $400 for a slow computer. Well, that doesn�t even hold a candle to the prices Aaron�s charges! Their ads frequently list computers (an area in which I can shop intelligently; I plan to post a computer-shopping guide when stores start advertising back-to-school sales). For example, the ad I�m currently looking at features their cheaper computer--the cheap one!--at a rate of $79.99/month for 12 months, excluding tax. Take a second to think about how much that actually works out to. 

Seriously, I�ll wait. 

Okay, I got impatient and did the math for you. It�s a total cost of $959.88, not even counting tax! If you were to buy it straight up, Aaron�s �Everyday low price� is advertised at $719.99.

The worst part is, a quick search on Amazon leads me to the same model, for $291, +$8.49 shipping, for a grand total of just under $300--for the same computer! So, how does a $660 markup sound to you?

As I alluded to earlier, this one is a slow computer! They have a more powerful model for $99.99/month. This is more reasonable, no? 

No.

For this computer--an entry-level one for a student�s needs--the total cost is $1199.88, excluding tax. Aaron�s also offers a service plan, which adds 10% to the monthly payment. 

Are you frickin kidding me?! $1200 for an ordinary Dell?! To begin with, Dell�s reliability over the past 5 years has lagged behind most of their competitors. In the second place, this thing has just an i3! For $1200, you could get a much nicer (but still overpriced) MacBook Air. Or, if you refuse to pay all that money for a Mac, $1200 would get you a whopping fast Windows laptop; one with an i7 and 8 GB of RAM! 

Okay, enough of the nerd talk. Essentially, they�re charging MacBook money for what amounts to a $400 computer. In fact, I found the same computer on Amazon for $399.99 new! And heres an i3 laptop Id actually recommend to friends/family: http://amzn.to/1z3ozxv  

If I�m gonna spend $1200 on a computer (trust me, I won�t), it�ll damn well run circles around this crappy Dell! In fact, I could spend $500 on a computer that would run faster than this Dell: http://amzn.to/1z3or14. Or http://amzn.to/TxGYBs. Or better yet, for $440: http://amzn.to/1sSFout. Or...well, you get the idea. Myriad options are both better and cheaper! 

Aaron�s policy extends to TVs ($39.99/month for 24 months for a 39-inch LED TV--that�s basically $1000. Wal-Mart has similar TVs for $300-400), sound systems ($79.99/month for 24 months [over $1900] for a 2300-watt sound system that sells for $800 on Amazon here), refrigerators, furniture sets, washer and dryer sets...need I go on? 

And theyre not alone: rent-to-own companies are guilty of the same thing.

This monthly payment business model plays on human psychology. Specifically, it�s taking advantage of the anchoring-and-adjustment effect. This effect is best understood this way: people have an idea about, say, the value of a product; new information leads people to adjust their estimate upward or downward from that initial idea. 

The problem is that people usually fail to adjust their estimate enough--so, companies that follow this �a few easy payments� business plan are capitalizing on this effect. They�re banking that people won�t take a few moments to research the price of these items and run a quick calculation. It really doesn�t take much thought to see what a rip-off this is for the customer! And in today�s world, with near-constant Internet access, there�s really no excuse for failing to look up how much a product typically costs.

I can hear somebody saying, �But I can�t afford to pay for a computer/TV/fridge/washing machine up front!� If you can afford the monthly payment of $80 or $100, just put that amount in a savings account for a couple months in a row. Pretty soon, you WILL have enough money to buy the item up front. 

Don�t fall for the sneaky tricks played by such businesses. Think for yourself, and do your own research. If you don�t...well, don�t say I didn�t warn you.