Types of Rentals

The types of rentals that may be established are described below.

Rent to Rent (RO): Rent to Rent contracts are rent month to month contracts that may or may not pay off. There is no set term. A certain percentage of rental payments made may or may not accumulate as rent credit.

Rent to Own (RF): Rent to Own contracts have a set term to pay off. These rent to own contracts may or may not have a finance charge. If there is a finance charge, the finance charge is based on a fixed interest, declining rate. The interest disclosed at the time of contract issue is all the interest that can be collected on the contract. Contracts of this type usually have provisions for late charges to be collected if payments are late. If the contract is paid off early, the interest will be rebated off the balance (like most installment contracts). Rent to Own contracts may also be considered Lease Purchase rentals. Lease Purchase contracts would not have a finance charge but may instead have a lease fee that is an even amount calculated into each payment.

Sales Contracts (SF): Sales contracts are similar to Rent to Purchase contracts with the exception being on a Sales contract the inventory is considered sold at the time of contract issue as opposed to the time the contract is paid off.

Simple Interest – Rent (RV): Simple Interest Rent contracts are rent to own contracts with a set term to pay off. These contracts do have a finance charge and the finance charge is based on a simple interest rate. Simple interest contracts calculate interest due on the principal from the time the last payment was made to the time of the current payment. For this reason, the amount of interest actually collected on the contract may be more than what was disclosed on the contract at the time of contract issue.

Simple Interest – Sales (SV): Simple Interest Sales contracts are similar to Simple Interest Rent contracts with the exception being on a Simple Interest Sales contract the inventory is considered sold at the time of contract issue as opposed to the time the contract is paid off.

Extended Warranty (EW): Extended Warranty contracts are service contracts.

Note: State laws typically determine the time of interest to use on rental and sales contracts, as well as the amount of interest and late charges you can collect.