You agree to transfer ownership of the appliance and rent it back. If the transaction were called a loan, the interest rate would be almost 800 percent. The difference is the requirement that the consumer write down an appliance serial number. The business that advances the money seldom, if ever, demands proof that the appliance exists or that the customer owns it. We explain that they have to own it outright.
Critics say sale-leaseback companies sometimes refuse appliances as payment.
Instead, they threaten to deposit the checks they are holding. Then the client either goes through a cash crunch or has to pay bounced-check fees and dodge bill collectors. The real collateral is the personal check, not the appliance, he says. Instead, consumers perceive sale-leaseback transactions to be personal loans and the 'rental payments' to be interest payments. Davis, on the other hand, says it's clear that a sale-leaseback is not a loan.