<PAGE>


                                                                Exhibit No. 10.5

                                [RAC Letterhead]



February 7, 2003



VIA FACSIMILE (814) 461-5401

Rent-Way, Inc.
Rent-Way of Michigan, Inc.
Rent-Way of TTIG, L.P.
Attn:  Chief Executive Officer
One Rent Way Place
Erie, Pennsylvania  16505


Dear Sir:

     Reference is made to that certain Asset Purchase Agreement, dated as of
December 17, 2002, by and among Rent-A-Center East, Inc., a Delaware corporation
(formerly known as Rent-A-Center, Inc.) ("ACQUIROR"), and Rent-Way, Inc. (the
"COMPANY"), Rent-Way of Michigan, Inc. ("RENT-WAY MICHIGAN") and Rent-Way of
TTIG, L.P. ("TTIG" and, together with Rent-Way Michigan, the "OPERATING
SUBSIDIARIES"), as amended by that certain letter agreement dated December 31,
2002 and that certain letter agreement dated January 7, 2003 (together, the
"ASSET PURCHASE AGREEMENT"). Capitalized terms not otherwise defined herein
shall have the meaning ascribed to such terms in the Asset Purchase Agreement.

     WHEREAS, on January 29, 2002, the Company and the Operating Subsidiaries
delivered to Acquiror, pursuant to SECTION 4.6(B) of the Asset Purchase
Agreement, a Schedule Supplement (the "FIRST SCHEDULE SUPPLEMENT") related to
newly threatened litigation arising from alleged unpaid overtime wages (the
"THREATENED LITIGATION"); and

     WHEREAS, the parties to the Asset Purchase Agreement desire to memorialize
their understanding with respect to various transitional and other matters.

     NOW, THEREFORE, this letter agreement, in accordance with SECTION 7.4 of
the Asset Purchase Agreement, memorializes the understanding of the parties to
the Asset Purchase Agreement regarding certain changes thereto and hereby
amends, modifies and supplements the Asset Purchase Agreement as follows:

     1.   Extension of Supplemental Review Period. The parties hereby agree
          that, notwithstanding the provisions of Section 4.6(b) of the Asset
          Purchase Agreement, the Supplemental Review Period related to the
          First Schedule Supplement shall extend until and include February 21,
          2003, provided, however, that such period shall earlier

<PAGE>
          terminate on the date of the Settlement (as hereinafter defined) of
          the Threatened Litigation.

     2.   Additional Closing Condition. The parties hereby agree that the Asset
          Purchase Agreement be amended such that the Settlement (as hereinafter
          defined) of the Threatened Litigation by the Company and the Operating
          Subsidiaries shall be deemed an additional condition to Acquiror's
          obligations to close under Section 5.2 of the Asset Purchase
          Agreement. For purposes of this letter agreement, "SETTLEMENT" shall
          mean that the named plaintiffs in the Threatened Litigation and the
          Company and its Subsidiaries have entered into a signed, written final
          agreement, whereby such plaintiffs agree to release the Company and
          its Subsidiaries from their claims contemplated by the Threatened
          Litigation and any and all other existing claims, and that proper
          documents have been filed with the court of competent jurisdiction
          seeking to dismiss all lawsuits filed by any of the plaintiffs against
          the Company or its Subsidiaries. The Company and the Operating
          Subsidiaries shall promptly notify Acquiror upon the Settlement of the
          Threatened Litigation.

     3.   Closing Date.

          (a)  The parties hereby agree that, notwithstanding the provisions of
               Section 1.6 of the Asset Purchase Agreement, in the event that
               (i) all of the conditions to Closing set forth in Article V of
               the Asset Purchase Agreement shall have been satisfied or waived
               by the party entitled to waive the same on or prior to February
               8, 2003, and (ii) the Settlement of the Threatened Litigation
               shall have occurred on or prior to February 7, 2003, then the
               Closing Date shall be February 8, 2003; provided, however, that
               the Closing Date may be extended by (a) the entire Supplemental
               Review Period required to evaluate any Supplemental Schedule in
               addition to the First Supplemental Schedule delivered on or prior
               to February 8, 2003 as set forth in Section 4.6(b) of the Asset
               Purchase Agreement, (b) the entire period, including any
               extension thereof, contemplated by Section 7.1(g) of the Asset
               Purchase Agreement with respect to the delivery of opinions
               contemplated by Section 5.2(k) and Section 5.2(l) of the Asset
               Purchase Agreement, or (c) any period of time upon mutual
               agreement in writing of the parties hereto. The parties hereby
               acknowledge that, in the event the Closing occurs on February 8,
               2003, the Creditor Payment and the Non-Competition Payment shall
               be made on February 10, 2003, and, notwithstanding that fact, the
               Closing Date shall be deemed to be February 8, 2003.

          (b)  In the event that (i) all of the conditions to Closing set forth
               in Article V of the Asset Purchase Agreement shall not have been
               satisfied on or prior to February 8, 2003 or (ii) the Settlement
               of the Threatened Litigation has not occurred on or prior to
               February 7, 2003, the Closing shall occur on the earlier of (x)
               the third Business Day following the date of Settlement of the
               Threatened Litigation or (y) February 21, 2003; provided,
               however, that the Closing Date may be extended by (a) the entire
               Supplemental Review Period required to evaluate any Supplemental
               Schedule in addition to the First Supplemental Schedule as set
               forth in Section 4.6(b) of the Asset Purchase Agreement, (b) the
               entire period,



                                       2
<PAGE>
               including any extension thereof, contemplated by Section 7.1(g)
               of the Asset Purchase Agreement with respect to the delivery of
               opinions contemplated by Section 5.2(k) and Section 5.2(l) of the
               Asset Purchase Agreement, or (c) any period of time upon mutual
               agreement in writing of the parties hereto. Nothing in this
               paragraph shall be deemed to otherwise amend any other conditions
               to closing set forth in Article V of the Asset Purchase
               Agreement, each of which shall be satisfied or waived by the
               party entitled to waive the same prior to the Closing Date
               contemplated hereunder.

          4.   Amendment to Section 9.9. Section 9.9 of the Asset Purchase
               Agreement is hereby amended to read in its entirety as follows:

                    "9.9   GOVERNING LAW; EXCLUSIVE JURISDICTION. THIS AGREEMENT
                    AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED
                    HEREBY WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
                    THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF
                    LAW PRINCIPLES). COURTS WITHIN THE STATE OF TEXAS WILL HAVE
                    EXCLUSIVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE
                    PARTIES HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR
                    RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS
                    AND DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES CONSENT TO
                    AND AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH
                    COURTS. EACH OF THE PARTIES HEREBY WAIVES, AND AGREES NOT TO
                    ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED
                    BY APPLICABLE LAW, ANY CLAIM THAT (i) SUCH PARTY IS NOT
                    PERSONALLY SUBJECT TO THE EXCLUSIVE JURISDICTION OF SUCH
                    COURTS, (ii) SUCH PARTY AND SUCH PARTY'S PROPERTY IS IMMUNE
                    FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (iii) ANY
                    LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN
                    INCONVENIENT FORUM."

          5.   Amendment to Form of Non-Competition and Non-Solicitation
               Agreement. Section 12 of the form of Non-Competition and
               Non-Solicitation Agreement referenced in Section 5.2(g) of the
               Asset Purchase Agreement and attached as Exhibit "B" thereto is
               hereby amended to read in its entirety as follows:

                    "12.   GOVERNING LAW; EXCLUSIVE JURISDICTION. THIS AGREEMENT
                    AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED
                    HEREBY WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
                    THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF
                    LAW PRINCIPLES). COURTS WITHIN THE STATE OF TEXAS WILL HAVE
                    EXCLUSIVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE
                    PARTIES HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT


                                       3
<PAGE>


                    OF OR RELATING TO THIS AGREEMENT AND THE AGREEMENTS,
                    INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES
                    CONSENT TO AND AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION
                    OF SUCH COURTS. EACH OF THE PARTIES HEREBY WAIVES, AND
                    AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST
                    EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (i) SUCH
                    PARTY IS NOT PERSONALLY SUBJECT TO THE EXCLUSIVE
                    JURISDICTION OF SUCH COURTS, (ii) SUCH PARTY AND SUCH
                    PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY
                    SUCH COURTS OR (iii) ANY LITIGATION COMMENCED IN SUCH COURTS
                    IS BROUGHT IN AN INCONVENIENT FORUM."

          6.   Inactive Rental Purchase Agreements. Notwithstanding Section
               1.2(c) of the Asset Purchase Agreement, the parties hereby
               acknowledge that, following the Closing Date, Acquiror may have
               in its possession at the Stores certain Rental Purchase
               Agreements of the Company or the Operating Subsidiaries which
               have terminated on or before the Closing Date (the "INACTIVE
               AGREEMENTS"). In the event that the Company or its Operating
               Subsidiaries need a copy of one or more Inactive Agreements in
               connection with the defense of pending or threatened litigation,
               the parties hereby agree that upon specific written request by
               the Company, the Acquiror shall use its reasonable efforts to
               locate and (i) forward copies of any such Inactive Agreements
               then in its possession or (ii) notify Company of its inability to
               locate same within five (5) days of receipt of such request.

          7.   Gateway Computers. The parties hereby agree that Acquiror shall
               reimburse the Company and the Operating Subsidiaries for fees
               actually paid by the Company or the Operating Subsidiaries to
               Gateway for the purchase and maintenance of internet service
               charges for Gateway computers on rent in the Stores following the
               Closing Date. Acquiror shall provide the Company with a list of
               such computers that are no longer on rent at least four (4) days
               prior to the first of each month.

          8.   Real Property Leases of Acquired Stores. The parties hereby
               acknowledge that, with respect to the Acquired Stores, upon the
               Closing, Acquiror shall notify the lessors of any real property
               related to the Acquired Stores that the transactions contemplated
               by the Asset Purchase Agreement have been consummated. The
               Company and the Operating Subsidiaries shall cooperate in good
               faith with Acquiror to obtain any consents of such lessors and
               enter into any documents as are reasonably necessary to ensure
               that such leases are properly assigned to Acquiror as
               contemplated by the Asset Purchase Agreement.

          9.   Vehicles. The parties hereby agree that, notwithstanding the
               provisions of SECTION 5.2(I) of the Asset Purchase Agreement, the
               Company and the Operating Subsidiaries may provide at Closing, in
               lieu of actual certificates of title on all vehicles which
               constitute Assets, a letter from the lessor of such vehicles
               stating that upon receipt of a specified amount of the Closing
               Payment, such vehicles shall be transferred free and clear of all



                                       4
<PAGE>

               liens and encumbrances. The Company and the Operating
               Subsidiaries shall provide the actual certificates of title to
               Acquiror as promptly as practicable following the Closing Date.

          10.  Inventory Adjustment Amendment. Section 1.3(b)(iv) of the Asset
               Purchase Agreement is hereby amended and restated to read in its
               entirety as follows:

               "with respect to the failure to represent and warrant on the
               Closing Date the matters set forth in SECTION 3.30, the Purchase
               Price shall be reduced by an amount equal to (a) $54,500,000,
               less the Closing Inventory (net of 30-days past due) (the "SHORT
               INVENTORY AMOUNT"), (b) multiplied by 1.0 (such adjustment being
               referred to as the "SHORT INVENTORY AMOUNT ADJUSTMENT")."

          11.  Closing Date Payment Adjustment. Solely for the purposes of
               determining the Purchase Price adjustment required at Closing
               pursuant to Section 1.3(b)(iv) of the Agreement as amended above,
               the parties agree that, on the Closing Date, the net book value
               of the Store inventory being sold pursuant to the Asset Purchase
               Agreement calculated under the accounting methods set forth in
               the Company's consolidated financial statements (including
               inventory ordered on or before the Closing Date but not yet
               delivered on the Closing Date), shall be $53,400,000 (the
               "ESTIMATED CLOSING DATE INVENTORY"). Accordingly, the parties
               agree that the Purchase Price shall be reduced by $1,100,000 for
               purposes of the Closing Date Payment. No later than three (3)
               days following the Closing Date, the parties shall determine the
               actual net book value of the Store inventory calculated under the
               accounting methods set forth in the Company's consolidated
               financial statements as of the Closing Date (including inventory
               ordered on or before the Closing Date but not yet delivered on
               the Closing Date)(the "ACTUAL CLOSING DATE INVENTORY"). In the
               event the Actual Closing Date Inventory amount shall exceed the
               Estimated Closing Date Inventory amount, such resulting amount
               shall be paid by Acquiror to the Company, on behalf of the
               Company and the Operating Subsidiaries. In the event the Actual
               Closing Date Inventory amount shall be less than the Estimated
               Closing Date Inventory amount, such resulting amount shall be
               paid by the Company, on behalf of the Company and the Operating
               Subsidiaries, to Acquiror. All such payments shall be made
               promptly by wire transfer upon the determination of such amount,
               but in any event within two (2) Business Days.

          12.  Non-Competition Payment. Notwithstanding Section 1.3(a) of the
               Asset Purchase Agreement, the parties hereby agree that, as
               directed by the Company, the Non-Competition Payment shall be
               paid, on behalf of the Company and the Operating Subsidiaries,
               directly to the bank designated by the Company, together with the
               Creditor Payment.

          13.  Entire Agreement. Notwithstanding the provisions of Section 9.5
               of the Asset Purchase Agreement and consistent with Section 7.4
               of the Asset Purchase Agreement, this letter agreement, together
               with the Asset Purchase Agreement and all other documents and
               instruments referred to therein, including, but not limited to,
               the letter agreement from Acquiror to the Company and the
               Operating Subsidiaries, dated December 31, 2002, relating to the
               extension of the Due Diligence Period, and the letter agreement
               from



                                       5
<PAGE>

               Acquiror to the Company and the Operating Subsidiaries, dated
               January 7, 2003, relating to the Acquiror's internal
               reorganization, constitutes the entire agreement and supersedes
               all other prior agreements and undertakings, both written and
               oral, among the parties with respect to the transactions
               contemplated by the Asset Purchase Agreement.

          14.  No Further Amendments. Other than as specifically provided for
               herein, all other terms and conditions of the Asset Purchase
               Agreement shall remain in full force and effect in accordance
               with its terms.

          15.  Governing Law. The provisions of Section 9.9 of the Asset
               Purchase Agreement, as amended hereby, shall apply to this letter
               agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




                                       6
<PAGE>

                                           RENT-A-CENTER EAST, INC.,
                                           formerly known as Rent-A-Center, Inc.


                                           By:
                                               --------------------------------

                                               Name:
                                                     --------------------------

                                               Title:
                                                      -------------------------



AGREED AND ACCEPTED:

RENT-WAY, INC.


By: /s/ RONALD D. DEMOSS
    -------------------------------------------
    Name: Ronald D. Demoss
    -------------------------------------------
    Title: Vice President and General Counsel
    -------------------------------------------


RENT-WAY OF MICHIGAN, INC.


By: /s/ RONALD D. DEMOSS
    -------------------------------------------
    Name: Ronald D. Demoss
    -------------------------------------------
    Title: Vice President and General Counsel
    -------------------------------------------


RENT-WAY OF TTIG, L.P.

By: Rent-Way Development, Inc.,
      its general partner


By: /s/ RONALD D. DEMOSS
    -------------------------------------------
    Name: Ronald D. Demoss
    -------------------------------------------
    Title: Vice President and General Counsel
    -------------------------------------------


cc: Hodgson Russ, LLP
    One M&T Plaza, Suite 2000
    Buffalo, New York 14203-2391
    Attention: John J. Zak, Esq.
    Telecopy: 716-849-0349





                                       7