What Happens If You Miss a Rent-to-Own Payment?

If you miss a rent-to-own payment, the store will typically contact you to arrange payment. You will not face immediate repossession, most states require written notice and a cure period before the store can recover the item. However, continued nonpayment can lead to repossession, potential collections, and in rare cases, criminal charges in a few states. Here is exactly what to expect and what to do.

The Typical Timeline After a Missed Payment

Based on NCLC analysis of state RTO statutes and industry practices, here is the general sequence of events after you miss a payment:

• Days 1-3: The store calls or texts to remind you of the missed payment. Most stores begin outreach within 24 to 48 hours.
• Days 3-7: A follow-up call and possibly a late fee. According to APRO, late fees vary by state but typically range from $2 to $5 per missed payment.
• Days 7-14: The store may send a written notice of default. Many state statutes require this written notice before any repossession action can begin.
• Days 14-30: If you have not responded or arranged payment, the store may begin repossession proceedings under your state's RTO law.
• Beyond 30 days: The store may repossess the item (following state-required procedures) or refer the account to a collection agency.

This timeline is general, your specific agreement and state law govern the actual process. The FTC emphasizes that stores must follow the procedures outlined in your signed agreement and your state's RTO statute.

Will a Missed Payment Affect Your Credit?

A single missed RTO payment typically does not affect your credit score because most RTO companies do not report to credit bureaus at all, as discussed in our guide on RTO and credit reporting. However, if the account is eventually sent to a third-party collection agency, that collection account can appear on your credit report. According to the CFPB, collection accounts can lower your FICO score by 50 to 100 points and remain on your report for up to seven years.

Your Reinstatement Rights

Most state RTO statutes give you the right to reinstate your agreement after missing payments. Reinstatement means you can get the same or a comparable item back by paying the overdue balance plus any applicable fees. According to NCLC research, reinstatement windows vary significantly by state:

• Full remaining term: Georgia, Indiana, Michigan, Ohio, Pennsylvania, you can reinstate at any time during the original agreement period
• 60-90 days: Alabama, Florida, Kentucky, North Carolina, Tennessee
• 30 days: Arizona, Colorado, Nevada, Oklahoma

During the reinstatement period, the store must hold the item (or a comparable replacement) available for you. You do not lose credit for payments already made, your agreement picks up where it left off.

Can You Be Charged with a Crime?

In a small number of states, failing to return RTO merchandise after the agreement terminates can be treated as a criminal matter. According to NCLC, some states have statutes that make it a misdemeanor to retain rental property after receiving written demand for its return. However, the FTC and consumer advocacy groups emphasize that this is rare and controversial. Legitimate nonpayment due to financial hardship is a civil matter, and criminal prosecution for RTO disputes has been criticized by the CFPB and state attorneys general as an abuse of the legal system.

To protect yourself, always return the item if you cannot continue paying. Get a written receipt confirming the return.

What to Do Right Now If You Cannot Make a Payment

Based on CFPB and NCLC consumer guidance, take these steps immediately:

• Call the store before the payment is due. Proactive communication is your best tool. Explain your situation and ask about options.
• Ask about a deferral or skip. Many stores will let you skip one payment and add it to the end of your agreement.
• Ask about a reduced payment plan. Some stores will temporarily lower your payment amount if you are experiencing a short-term hardship.
• Consider returning the item. If you cannot foresee being able to resume payments, returning the item ends your obligation immediately with no penalty.
• Get everything in writing. Any agreement to defer, reduce, or modify payments should be documented in writing.

Preventing Future Missed Payments

The CFPB recommends aligning your RTO payment schedule with your pay schedule. If you are paid weekly, choose weekly payments due the day after payday. If paid biweekly, ask the store about biweekly payment options. Setting up autopay, available at most national RTO chains, eliminates the risk of forgetting a payment. Finally, factor the full RTO payment amount into your monthly budget before signing any agreement.