When getting a payday loan or renting furniture, the good news is that you get the money or furniture immediately.
The bad news is you’re stuck paying high monthly interest charges for having money in your pocket to pay bills before payday arrives, or furniture for your home without having to pay in full upfront for it.
The low monthly payments are easier on your wallet in the short-term, but over time the high interest rates can triple the cost of the loan or how much you would have paid upfront for the furniture.
Auto tires have now entered this world of being short on cash, allowing people who live paycheck to paycheck and may not have good credit to be able to afford new tires by renting them and eventually owning them by making monthly payments.
As the Los Angeles Times reports, one of the tire renting businesses, Rent-N-Roll, charged a couple $54.60 a month for 18 months for four basic Hankook tires. That adds up to $982, almost triple what the tires would have cost at Wal-Mart.
Along with having bad credit and being unable to buy new tires, some people may be renting tires because tire prices are rising so much. Costs for natural rubber and petroleum used to make tires have increased, with the average price of a passenger tire in the United States up 57% from 2006 to 2012.
Planet Money reports a 40% rise in tire prices in the past five years, due in part to a tariff the U.S. imposed on Chinese tire imports. The tariff was removed in October.
Some tire rental companies offer rental tires for the same price as someone would pay to buy them outright, and with almost no money down, but only if they’re paid off within 120 days. When that “same as cash” deadline passes, the cost could skyrocket to more than 120% annual interest.
Rent-a-Wheel required a customer to make her $41.90 weekly payment in person, and sent police to her house to remind her to pay up.
While police involvement is rare, some law enforcement agencies consider not making a payment theft because rental companies own the tires until they’re paid for in full. Repossession of tires can proceed in some contracts if payment isn’t made.
A Fort Worth, Texas, Police Department form to claim theft of rental property asks if the renter has been told that a police report will be made and criminal prosecution will be pursued if property isn’t returned.
The unfortunate thing about tires is that all tires eventually need to be replaced, even if it’s a spare sitting in the trunk that hasn’t been used.
John Wetmore, producer of the “Perils for Pedestrians” TV show, says he had a 20-year-old spare tire that spontaneously blew out one day while sitting in the trunk because the rubber had deteriorated from old age. “Since that incident, I always swap my spare for one of the old tires when I buy a set of four new tires,” Wetmore says.
To avoid uneven tire wear, avoid hard stops and starts, and hard cornering, he recommends. Also have the car’s alignment checked often and watch for signs of worn front-end parts that can lead to excessive and uneven tire wear, and keep the tires inflated to the manufacturer’s recommendations.
These tire tips may not stop you from having to replace your tires, but they can help lessen the frequency of tire store visits. And maybe, if you can think ahead enough, put aside the weekly payment you’d be making to the tire rental company in a fund to pay for new tires in full when you need them.
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