Progressive Leasing, often referred to as a "Rent-to-Own" (RTO) or "Lease-to-Own" agreement, is a financing option that allows consumers to acquire merchandise by making a series of payments over time, with the option to purchase the item at the end of the lease term. This method is particularly popular for individuals who may not have established credit or prefer not to use traditional credit financing.
How it Works:
Lease Agreement: You sign an agreement to lease an item (like furniture, electronics, or appliances) for a set period (the lease term).
Regular Payments: You make regular payments (often weekly, bi-weekly, or monthly). These payments are typically higher than what you might expect from a traditional loan.
Option to Purchase: At the end of the lease term, you usually have the option to purchase the item for a predetermined price (often a nominal fee).
Ownership: Once the final purchase option payment is made, the item legally becomes yours.
The Math Behind the Calculator:
This calculator helps illustrate the potential total cost of acquiring an item through a progressive lease agreement. Progressive leasing often results in a significantly higher total cost compared to paying the item's retail price upfront or financing it through a traditional loan. The primary costs involved are:
Item Retail Price: The original price of the item if purchased outright.
Total Lease Payments: This is calculated by multiplying the periodic payment amount by the total number of payment periods in the lease term.
Purchase Option Fee: A final, usually small, fee paid at the end of the lease term to take ownership.
The formula for the Total Cost to Own is:
Total Cost to Own = (Weekly Payment Amount * Lease Term in Weeks) + Purchase Option Fee
This calculator assumes a standard Purchase Option Fee of $10 for illustrative purposes, which is a common nominal fee in many RTO agreements. You would compare this 'Total Cost to Own' against the 'Item Retail Price' to understand the difference, which represents the additional cost of using the lease-to-own service.
Use Cases and Considerations:
Building Credit: Some progressive leasing companies report payment history to credit bureaus, which can help individuals build or rebuild credit.
Immediate Need: It allows individuals to obtain necessary items immediately, even with limited cash or credit.
Flexibility: Often, there are no penalties for early payoff or returns, offering more flexibility than some traditional loans.
Higher Overall Cost: The most significant drawback is the substantially higher total cost of acquiring the item. Consumers should carefully weigh the convenience against the premium price.
Item Condition: Be aware that you may be leasing a used item, and its condition might vary.
Read the Fine Print: Always thoroughly read and understand the terms and conditions of any progressive leasing agreement before signing.
This calculator is a tool to help you visualize the financial implications of progressive leasing. Always make informed decisions based on your personal financial situation.
function calculateProgressiveLease() {
var itemPrice = parseFloat(document.getElementById("itemPrice").value);
var paymentAmount = parseFloat(document.getElementById("paymentAmount").value);
var leaseTermWeeks = parseFloat(document.getElementById("leaseTermWeeks").value);
var purchaseOptionFee = 10; // Standard nominal fee for many RTO agreements
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
var leaseOutcomeDiv = document.getElementById("lease-outcome");
// Clear previous results and hide result div initially
resultValueDiv.innerHTML = "";
leaseOutcomeDiv.innerHTML = "";
resultDiv.style.display = "none";
// Input validation
if (isNaN(itemPrice) || itemPrice <= 0) {
alert("Please enter a valid Item Retail Price greater than zero.");
return;
}
if (isNaN(paymentAmount) || paymentAmount <= 0) {
alert("Please enter a valid Weekly Payment Amount greater than zero.");
return;
}
if (isNaN(leaseTermWeeks) || leaseTermWeeks 0) {
leaseOutcomeDiv.innerHTML = "Your total cost to own is $" + costDifference.toFixed(2) + " more than the retail price.";
} else {
leaseOutcomeDiv.innerHTML = "Your total cost to own is the same or less than the retail price (this is unusual for standard progressive leases).";
}
resultDiv.style.display = "block";
}