On August 2, Gov. David A. Paterson signed into law a stringent rent to own bill that will increase consumer protections through enhanced contract disclosures and new price setting guidelines in the state of New York.

The new law, described as the “the strictest rent to own law in the country”, mandates more information be given to customers up front, in a clear and very visible format, and also defines for the first time how the base prices are set.   

The language of the bill indicates New York lawmakers find rent-to-own stores “provide a unique transaction that is popular with many consumers,” enabling them to “obtain high-quality goods.” What was needed, according to the text of the bill, was “appropriate regulatory guidance” about how to set cash prices at “fair and reasonable levels,” and “clear and useful disclosures” so consumers can “make informed decisions.”

Central to the new law is its establishment of a framework for setting the prices, not only for the first rental of each item, but on subsequent rentals when the item is considered “used.” The bill bases pricing on the merchant’s documented cost for each item — what the merchant paid the manufacturer — and sets the cash price as a multiple of that.

How will this affect the rent to own car business, if at all?