Predatory Lending Awareness Quiz

2. Most rent-to-own store customers are college students and recent graduates who have purchased their first home.

CORRECT

False. On average, rent-to-own customers are disproportionately African-American, younger, less educated, have lower incomes, have children in the household, rent their residence, live in the South, and live in non-suburban areas. Further, a 2009 study found that only about 25 percent of rent-to-own customers rented the item long enough to own it, and that lower income and repeat customers were less likely to end up owning the item.

References:
Anderson, M. H., & Jaggia, S. (2009). Rent-to-own agreements: Customer characteristics and contract outcomes. Journal of Economics and Business, 61, 51-69.

Lacko, J., McKernen, S., & Hastak, M. (2000). Survey of Rent-To-Own Customers: Executive Summary. Washington, DC: Federal Trade Commission. Retrieved on November 29, 2007 from http://www.ftc.gov/reports/renttoown/rtosummary.shtm