7 On Your Side: Is renting new tires a good deal?

SALINAS, Calif. (KGO) -- There is a new way to buy tires. You don't pay cash up front and your credit is never checked. That may sound perfect, especially if you're tight on cash, but why are so many consumer activists not so thrilled about this? 7 On Your Side has been looking into rent-to-own tires.

Rent-to-own is best known for furniture, televisions and appliances. You don't buy on credit, instead you pay rent, and if you pay enough, or long enough, you own the items. Now, this idea has left on the home and hit the streets.

Noel Arroyo keeps his car nice, but his tires were worn. That's bad news because he lives in Salinas and his new job -- a good paying job -- was over the hills, up the coast, just above Santa Cruz in the small town of Scotts Valley. It is 40 miles each way, 80 miles a day, 400 miles a week. His tires just couldn't do it.

"I was going through hard times. I had just barely gotten a job," Arroyo said.

Scott's Valley had the dream job and Arroyo was in Salinas with no money to buy tires and no credit to finance them. So he decided to go to Rent A Wheel because of the low monthly payments and no interest deals.

Tires with low payments and no interest? Does that really exist? Yes! Because he didn't finance the tires, he rented them from Rent A Wheel. Arroyo explained you have to pay them every week, not monthly.

Rent A Wheel, which rents tires and rims, is a major new player in a financial world more Americans are finding themselves in. Banks don't operate in this world -- check cashing places and pawn shops do. Financing can be done through pay day loans and prepaid debit cards can take the place of credit cards. However, it is all an expensive way to go through life.

We took a look at a wheel rental deal that was $1,102.40 cash or 90 days same as cash, which means if the tires are paid off within three months, the customer gets the cash price. Payments are $42.40 per week for 52 weeks. If the customer goes that long, the total price comes in at more $2,200.

So how are those with low incomes supposed to pay twice as much as the rest of us?

"I do think it speaks to the fact more and more people have a kind of economic stress that maybe they didn't have 20 or 30 years ago," Sen. Bob Casey, Jr., D-Pennsylvania, said.

Casey is concerned some rent-to-own operators are taking advantage of their customers with long contracts and high prices. The senator wants the Federal Trade Commission and the Consumer Financial Protection Bureau to regulate rent-to-own businesses.

Florida-based RNR Tire Express is eyeing the Bay Area and would like to have a store here soon. Owner Larry Sutton says renting has its advantages.

"If they pay a week, they change their mind a week later and say, 'Hey, I really don't like this,' they bring them back, we uninstall them and boom... they don't owe anything and no debt incurred," Sutton said.

But in the world of tires, what goes around comes around. And if the customer doesn't make their rental payment, those tires could be repossessed.

James Creighton-Bey is an RNR customer. He didn't need tires, he wanted cool rims.

"I had just had heart surgery, number one, and I didn't have the money like I wanted to put out. I had just relocated to my apartment and I wanted the wheels on the new car I had just purchased, so that's why I did it that way," Creighton-Bey said.

For Creighton-Bey it was a purchasing option. For Arroyo it was something else altogether - necessity.

We asked Arroyo what he would have done for tires if he didn't have a rental option and he said he would have gone somewhere to get used tires.

Once you go past the 90 or 120 days same as cash period, you can still get a discount. At many of these stores if you pay off the amount in a lump sum, you get a 50 percent discount on what you owe. But remember, if you keep making that weekly minimum payment, you are going to pay something like double.