Staying safe · Module 3 of 4
When the deal is the trap
Legal deals designed to work against you, like rent-to-own and loans that hide their real cost.
Key terms in When the deal is the trap
- Rent-to-own agreement
A rent-to-own agreement is a contract that lets a person take home an item, such as furniture, electronics, or sometimes a house, in return for regular weekly or monthly payments, with the option to own it once all payments are made. Total cost can be well above the cash price because of markups and fees. Most states have specific laws covering these plans.
Source: Federal Trade Commission, Buy Now, Pay Later, Rent-to-Own, Lease-to-Own, and Layaway
- Payday loan
A payday loan is a short-term, high-cost loan for a small amount that is typically due on the borrower's next payday. Repayment is usually secured by a post-dated check or by electronic access to the borrower's bank account, not by collateral. Terms commonly run two to four weeks, and fees translate into very high annual percentage rates.
Source: Consumer Financial Protection Bureau, What is a payday loan?
- Auto title loan
An auto title loan is a small, high-cost loan in which the borrower uses a vehicle as collateral and the lender holds the title until the loan is repaid. The amount lent depends mainly on the value of the vehicle, not on a credit check. If the borrower cannot repay, the lender can repossess and sell the vehicle, and research by the Consumer Financial Protection Bureau found this happens to a notable share of borrowers.
Every term on Lever is in the money glossary.
About this module
When the deal is the trap is part of Staying safe, one of 15 subjects in Lever. It’s a short run of 5 lessons, about 13 minutes in all, so you can finish it in one sitting.
Every lesson takes one idea at a time. You read it with the math worked out step by step, answer a question that puts it to use, then see why the right answer is right and why the others aren’t.
It’s for anyone who was never taught this, and you don’t need to know anything first. Every lesson is free. Lever works out what you already know, so you can start here or let your path bring you to it.
More in Staying safe
-
1
Before you hand anything over
How to spot a scam, phishing messages, fake friends and “pay to get paid” offers, and what to do right after you’ve paid.
7 lessons -
2
When something smells wrong
Ponzi and pyramid schemes, misleading numbers, fake investing apps, and services built to be hard to cancel.
6 lessons -
4
Locking it down
Two-step sign-in, safer payments, protecting your identity, and what you share online.
6 lessons
Try this module
It’s part of Staying safe. Lever will bring it to you when you’re ready, or you can go straight there.