Rent-to-Own Contracts and Minnesota's Usury Law

What Is a Rent-to-Own Contract Under Minnesota Law?

Minnesota calls a rent-to-own contract a “rental-purchase agreement” and regulates it at Minn. Stat. §§ 325F.84 to 325F.97. No Minnesota statute gives those sections a short title. The revisor’s group heading is “Rental Purchase Agreements,” and the enacting session law, 1990 Minn. Laws ch. 527, contains no short-title section, so “the Rental Purchase Agreement Act” is a convenient label rather than the statute’s name. Minn. Stat. § 325F.98, which the older cases include in the range, was repealed by 1997 Minn. Laws ch. 7, art. 2, § 67, and the same article amended § 325F.84, subd. 1 to end the range at 325F.97, retroactive to October 15, 1995.

Under Minn. Stat. § 325F.84, subd. 8, an agreement is a rental-purchase agreement only if all four of the following apply:

• The lessor is regularly engaged in the rental-purchase business.
• The agreement is for an initial period of four months or less, whether or not there is any obligation beyond the initial period, is automatically renewable with each payment, and permits the lessee to become the owner of the property.
• The lessee is a person other than an organization.
• The lessee takes the property primarily for a personal, family, or household purpose.

The four-month figure describes the initial period, not the life of the arrangement. The statute expressly contemplates obligations that continue past that period, and an agreement that renews weekly or monthly can run far longer.

The definitions in the same section tell you whether these protections reach your transaction:

• Lessee. A “lessee” is “a natural person who rents personal property under a rental-purchase agreement for personal, family, or household use.” Minn. Stat. § 325F.84, subd. 5. A business renting equipment for its operations falls outside these sections.
• Lessor. A “lessor” is “a person who, in the ordinary course of business, regularly leases, offers to lease, or arranges for the leasing of property under a rental-purchase agreement.” Minn. Stat. § 325F.84, subd. 6. A party who merely arranges the leasing is a lessor, so the lessor need not own the goods.

One more definition drives the cost analysis later on this page. “Cash price” means “an amount equal to the equivalent fair market value for goods offered under a consumer credit sale as provided under section 325G.15.” Minn. Stat. § 325F.84, subd. 3. The benchmark you measure total payments against is a statutory fair-market figure, not whatever number the store prints on the tag.

These contracts are most commonly used for furniture, appliances, electronics, and similar consumer goods. Sections 325F.84 to 325F.97 also do not apply to a rental agreement in which the renter has no legal right to become the owner of the rented property at the end of the rental period. Minn. Stat. § 325F.96.

How Does Minnesota’s Usury Law Limit Rent-to-Own Charges?

Under Minn. Stat. § 334.01, subd. 1, interest on a legal indebtedness runs at six percent a year ($6 upon $100) unless a different rate is contracted for in writing, and no person may directly or indirectly take or receive more than eight percent a year ($8 on $100) for the loan or forbearance of money, goods, or things in action. Six percent is the default rate. Eight percent is the ceiling.

The same subdivision carries further limits worth checking against a payment schedule:

• Interest may not be compounded, though a contract to pay non-usurious interest on interest that is overdue is not usury.
• A provision increasing the rate of interest after maturity, or increasing it after the contract is made and delivered, “shall work a forfeiture of the entire interest,” with two stated carve-outs: contracts bearing no interest before maturity, and an agreement extending the maturity date that prices the balance then due.
• An agreement extending a maturity date may not provide for an increased rate above $8 on $100 for one year.

The caps yield where an exception applies. Under Minn. Stat. § 334.01, subd. 2, no rate limitation applies to credit of $100,000 or more extended under a written contract signed by the debtor. Under Minn. Stat. § 334.022, enacted in 2002, no rate limitation applies to an extension of credit to an organization, which the statute defines to include a corporation, partnership, joint venture, cooperative, limited liability company, or association. And Minn. Stat. § 334.011, subd. 1 permits a higher, floating rate on a loan or forbearance of less than $100,000 for business or agricultural purposes, expressly excluding loans that finance the borrower’s residence. A consumer rent-to-own contract does not reach any of those exceptions.

How the Cap Reaches a Lease

The usury statute speaks of a “loan or forbearance,” and a rent-to-own customer pays in advance and can walk away. The bridge is statutory. A terminable bailment or lease of goods is a “sale of goods” under Minn. Stat. § 325G.15, subd. 5 when three criteria are met: the lessee has the option to renew by making the payments the contract specifies; the contract obligates the lessor to transfer ownership for no other or a nominal consideration on full compliance; and the payments contracted for, counting renewal payments, are substantially equivalent to or in excess of the aggregate value of the property and services involved. Then Minn. Stat. § 325G.16, subd. 4 provides that “[a]ny lease or bailment of goods which constitutes a consumer credit sale shall be deemed to be a sale for all purposes,” and that the lessor’s retained interest “shall be a security interest only.”

That is the step the Minnesota Supreme Court relied on in Miller v. Colortyme, Inc., 518 N.W.2d 544, 548 (Minn. 1994): “Because rent-to-own agreements are consumer credit sales for all purposes, they are subject to the same consumer protection laws as ordinary credit sales, including the general usury statute.”

The Four Elements of a Usury Claim

Minnesota courts require four elements to establish a usury violation. Citizen’s Nat’l Bank of Willmar v. Taylor, 368 N.W.2d 913, 918 (Minn. 1985); Rathbun v. W.T. Grant Co., 300 Minn. 223, 230, 219 N.W.2d 641, 646 (1974):

1. A loan of money or forbearance of debt,
2. An agreement between the parties that the principal shall be repayable absolutely,
3. The exaction of a greater amount of interest or profit than is allowed by law, and
4. The presence of an intention to evade the law at the inception of the transaction.

Four points about that list matter to a rent-to-own contract.

The elements are conjunctive. “The absence of any one of these requisites precludes finding of usury.” Rathbun, 300 Minn. at 230, 219 N.W.2d at 646.

Forbearance has a settled meaning. “In usury law, the term signifies ‘contractual obligation of a lender or creditor to refrain, during a given period of time, from requiring the borrower or debtor to pay a loan or debt then due and payable.’” Rathbun, 300 Minn. at 233, 219 N.W.2d at 648.

The label on the agreement does not decide the question. “We will look through the form to the substance of a transaction.” Rathbun, 300 Minn. at 235, 219 N.W.2d at 649. That is why calling the paperwork a lease does not settle whether the usury statute reaches it.

Good faith is not a defense. “To be guilty of violating the usury law, a lender need only intend to charge a rate that is in fact usurious,” and “[i]t matters not whether the lender knows he is violating the usury law.” Miller, 518 N.W.2d at 550. That is why summary judgment for the consumers on the usury claim was proper in Miller.

As explained below, the Minnesota Supreme Court held that the first two elements are satisfied by operation of statute for rent-to-own transactions, even though the consumer technically does not incur debt.

Whether an Exception Saves the Dealer

The court closed the two obvious escape routes in a footnote. “There are several statutory exceptions to the general usury statute applying to specific types of credit transactions, but none of these exceptions are applicable to the rent-to-own agreements at issue. The rent-to-own contracts at issue also are not exempt from the usury statute under the judicially created time-price doctrine. This doctrine may apply where a seller fixes one price for cash and another price for credit. Respondents do not offer consumer items for immediate sale.” Miller, 518 N.W.2d at 548 n.4.

The last sentence is the fact that decided the time-price point in Miller. The Eighth Circuit later treated the argument as closed off for rental-purchase agreements: “RAC’s argument is foreclosed by the rulings of the Minnesota Supreme Court,” and “the loan or forbearance element of usury, missing in time-price transactions, is satisfied in rental purchase agreements by operation of statute.” Fogie v. Thorn Americas, Inc., 95 F.3d 645, 653 (8th Cir. 1996). Offering the same goods for immediate cash sale does not take a rental-purchase agreement outside the usury statute.

What the Credit Sale Classification Buys You

Since 1981 the same act has also required that a covered terminable bailment or lease contract specify whether the goods are new or used. Minn. Stat. § 325G.16, subd. 5; Act of March 27, 1981, ch. 10, § 3, 1981 Minn. Laws 18-19.

What Are the Benefits and Risks of Rent-to-Own Contracts?

Rent-to-own contracts serve a real market need, and the total cost to the consumer is often far higher than the item’s fair market value. Both sides of the transaction have legitimate interests:

Benefits:

1. Consumers can acquire property even if they do not have cash on hand or the ability to obtain traditional financing.
2. Owners can generate income from goods they might not otherwise sell outright.

Risks:

Rent-to-own offers are typically marketed to consumers who cannot afford to buy outright. The Minnesota Supreme Court stated the cost pattern directly: “In order to acquire ownership of an item, consumers ordinarily must pay a total price far in excess of fair market value.” Miller, 518 N.W.2d at 546.

The two contracts in the record show the spread. A used washer and dryer with a stated cash price of $800.75 could be acquired through 16 monthly payments of $84.40, for a total of $1,350.40, or 69 weekly payments of $21.10, for a total of $1,455.90. Those totals exceed the stated cash price by roughly 69 percent and roughly 82 percent. A 19-inch color television with a stated cash price of $470 could be acquired through 18 monthly payments of $47.70, for a total of $858.60, or 78 weekly payments of $12.75, for a total of $994.50. Miller, 518 N.W.2d at 546. Those figures are premiums over the stated cash price, not annual interest rates; the opinion states no annual percentage rate for these contracts.

The court also explained why a contract you may cancel at any time still operates like a credit sale. “As the consumer of a rent-to-own product continues making weekly or monthly payments under the contract, the pressure to keep making payments and to exercise the purchase option grows until it becomes the only feasible rational choice, given the alternative of completely forfeiting all past payments and returning the goods.” Miller, 518 N.W.2d at 548 n.2.

Why Does Minnesota’s Usury Cap Reach Rent-to-Own Pricing?

Minnesota’s usury cap is a limit of general application, not a price control the Legislature wrote for the rent-to-own industry. The ceiling in Minn. Stat. § 334.01 is old law: the revisor’s history line traces the section to the Revised Laws of 1905. It reaches these contracts through the Consumer Credit Sales Act, which defines certain terminable leases as sales of goods (Minn. Stat. § 325G.15, subd. 5) and deems such a lease a sale for all purposes (Minn. Stat. § 325G.16, subd. 4). The rental-purchase statute itself imposes no cap on total payments or on interest rates. Miller, 518 N.W.2d at 551.

The Minnesota Supreme Court described the policy in its own words: “The purpose of the usury law is to protect consumers by limiting the amount of interest which can be charged on a credit sale or loan.” By defining rent-to-own transactions as consumer credit sales for all purposes, “the legislature has established that consumers who enter into rent-to-own transactions are to benefit from the same protections as consumers who purchase goods through ordinary installment sales.” Miller, 518 N.W.2d at 549.

Some consumers and industry participants view the result as paternalistic. The industry made the economic version of that argument in Miller and lost it. The appellants there answered that the lessor could adjust the contract terms and still realize profits, “and in any event, lost profits is not a valid defense to a usury claim.” Miller, 518 N.W.2d at 551. So the cap does not make the standard pricing model merely unprofitable. It makes it unlawful.

Two years after Miller, the Eighth Circuit applied that rule to a national chain. In Fogie v. Thorn Americas, Inc., 95 F.3d 645, 651-54 (8th Cir. 1996), the court affirmed summary judgment for the plaintiff class and a permanent injunction barring the operator of the Rent-A-Center stores from entering into usurious credit sales in Minnesota. Adjusting the charge for the duration of the class contracts produced “annual percentage rates ranging between 46% for the longest contract and 746% for the shortest,” which “far exceed the legal limit under the usury statute.” The court rejected the chain’s vagueness, ex post facto, good-faith-reliance, and time-price defenses. Weigh that decision for what it is: federal appellate authority applying Minnesota law, persuasive rather than controlling in a Minnesota state court.

The litigation ended in Fogie v. Thorn Americas, Inc., 190 F.3d 889, 892 (8th Cir. 1999), where the court recorded that “[t]he plaintiffs recovered approximately $30 million in damages on their usury claim” and affirmed the judgment except for a premature cy pres fund, which it vacated. The same opinion records that “the Minnesota Supreme Court declined to apply the Miller v. Colortyme decision prospectively only,” so the holding was not limited to contracts written after June 24, 1994. Fogie, 190 F.3d at 902.

What Did the Minnesota Supreme Court Decide in Miller v. Colortyme?

In Miller v. Colortyme, Inc., 518 N.W.2d 544 (Minn. 1994), the Minnesota Supreme Court held that rent-to-own transactions are consumer credit sales subject to Minnesota’s usury statute. The court reversed the court of appeals and remanded to the district court for further proceedings.

The case involved D.E.F. Investments, Inc. (doing business as “Renter’s Choice Home Furnishings”), which used standard form contracts to lease consumer goods including furniture, televisions, and appliances. After each monthly or weekly term, the customer could elect to renew. To acquire ownership, consumers generally paid far in excess of fair market value. Two consumers, Delilah Miller and Craig Stenzel, filed a class action against the dealer on April 7, 1992, seeking money damages along with declaratory and injunctive relief. Miller, 518 N.W.2d at 546. The district court certified a class of individuals who entered rent-to-own contracts after April 7, 1986 that provide for ownership at the end of a predesignated term without requiring an additional balloon payment.

The court of appeals had held that the agreements were not consumer credit sales and were not usurious. Miller v. Colortyme, Inc., 504 N.W.2d 258 (Minn. App. 1993), rev’d, 518 N.W.2d 544 (Minn. 1994). That decision is no longer good law.

The supreme court reached two critical holdings.

First, rent-to-own contracts are consumer credit sales under the Consumer Credit Sales Act (Minn. Stat. §§ 325G.15 and 325G.16). The legislature had amended the statute in 1981 to define terminable leases meeting three criteria as “sales of goods,” and the court saw “no conceivable reason why the legislature would amend” that subdivision “to define certain terminable leases as sales if it did not intend such leases to be protected ‘consumer credit sales’” under subdivision 2. Miller, 518 N.W.2d at 547-48.

Second, rent-to-own contracts are subject to the usury statute. Although rent-to-own consumers technically do not incur debt and have no absolute obligation to repay principal, the court held that the first two common law elements of usury are met by operation of the statute. Miller, 518 N.W.2d at 549:

The legislature’s decision to treat rent-to-own transactions as credit sales recognizes that although these transactions purport to be short-term leases, they operate in substance much like ordinary installment sales. Consumers who purchase goods through rent-to-own agreements may not incur debt, but they still implicitly pay interest in return for the ability to pay for goods over time. Moreover, rent-to-own customers may not have an absolute obligation to repay a principal amount, but their situation is analogous to that of ordinary buyers on credit in that they must either forfeit possession of a good or continue paying for it.

On the excessive-charge element, the court held as a matter of law that no reasonable factfinder could conclude that the difference between the total payments required under the contracts and the value of the goods and services extended amounted to as little as six percent of the total payments. Miller, 518 N.W.2d at 550.

The court also rejected the argument that the rental-purchase statute (Minn. Stat. §§ 325F.84 to 325F.97) repealed the Consumer Credit Sales Act, holding that the two statutes provide cumulative protections. Miller, 518 N.W.2d at 551. It applied the implied-repeal standard of Minn. Stat. § 645.39, under which, where the later law does not set up a general or exclusive system covering the subject, that law impliedly repeals an earlier one on the same subject only where the two are irreconcilable.

“Cumulative” carries a condition the statute writes into itself. Minn. Stat. § 325F.85 provides that “[i]f the consumer protection provisions of sections 325F.84 to 325F.97 conflict with sections 325G.15 and 325G.16, sections 325F.84 to 325F.97 apply to a rental-purchase agreement and supersede sections 325G.15 and 325G.16.” The rental-purchase sections displace the two consumer-credit-sale sections only where they actually conflict, and the court found no irreconcilable conflict.

Two citation-form notes for anyone reading the opinion alongside the current statutes. The opinion cites the rental-purchase statute as sections 325F.84 to .98; section 325F.98 was repealed by 1997 Minn. Laws ch. 7, art. 2, § 67, and the range now ends at 325F.97. The opinion also quotes the 1992 edition of Minn. Stat. § 334.01. Subdivision 1, which carries the six percent and eight percent figures, has not been amended since 1983, but subdivision 2 has been rewritten three times since, most recently by 2025 Minn. Laws 1st Spec. Sess., ch. 4, art. 2, § 10, which substituted “a conventional loan or contract for deed” for “contracts for deed.”

What Should You Do Before Entering a Rent-to-Own Agreement?

If you are considering a rent-to-own contract in Minnesota, whether as a consumer or a business offering these agreements, have the contract reviewed by an experienced attorney. These transactions are regulated by multiple overlapping statutes. A rent-to-own agreement that qualifies under the Consumer Credit Sales Act is a consumer credit sale. Minn. Stat. § 325G.15, subds. 2, 5; Minn. Stat. § 325G.16, subd. 4; Miller, 518 N.W.2d at 548-49. That classification measures the agreement against the interest limits in Minn. Stat. § 334.01, subd. 1. If the cost of lease services, adjusted for the duration of the contract into an annual rate as the Eighth Circuit did in Fogie v. Thorn Americas, Inc., 95 F.3d 645, 652 (8th Cir. 1996), exceeds that cap, the contract is “void except as to a holder in due course” under Minn. Stat. § 334.03, subject to the exceptions that section states, and you may recover “the full amount of interest or premium so paid, with costs,” if the action is brought within two years, under Minn. Stat. § 334.02. Where the original holder of a usurious note sells it to an innocent purchaser, section 334.03 lets the maker recover back from the original holder the principal and interest paid on the note.

A different usury penalty sits in Minn. Stat. § 334.011, subd. 2, which applies when a rate greater than subdivision 1 permits is charged: forfeiture of the entire interest due on the debt, plus a civil action for twice the amount of interest already paid. The forfeiture reaches interest still owed; the doubling remedy reaches interest already paid. Those two remedies are not the consumer’s remedies on a rent-to-own agreement. Minn. Stat. § 334.011 reaches only business or agricultural credit of less than $100,000, and expressly excludes loans financing the borrower’s residence; Trapp v. Hancuh, 530 N.W.2d 879, 886 (Minn. Ct. App. 1995) holds that remedy the exclusive usury remedy there. Footnote 5 of the Miller opinion, reproduced in the addendum below, paraphrases that subdivision, but the recovery in the Minnesota rent-to-own class litigation ran on the general usury remedies, interest paid under section 334.02 and cancellation of the contract as void under sections 334.03 and 334.05, not on section 334.011. Fogie v. Thorn Americas, Inc., 190 F.3d 889, 900 (8th Cir. 1999).

Key considerations include:

• For consumers: Calculate the total cost of ownership against the cash price. Minnesota’s own disclosure statute makes that comparison easy: the lessor must disclose “[t]he total of payments necessary to acquire ownership of the property,” explained as the “total dollar amount of payments you will have to make to acquire ownership,” and the difference between that amount and the cash price, “using the term ‘cost of lease services.’” Minn. Stat. § 325F.86(a), (c). The Eighth Circuit treated that “cost of lease services” figure as interest.
• For businesses: Your pricing structure has to stay inside the interest ceiling in Minn. Stat. § 334.01. The early purchase option in Minn. Stat. § 325F.93 adds a second constraint: at any time after the first periodic payment, the lessee may acquire ownership by tendering 55 percent of the difference between the total of scheduled payments and the total amount paid on the account. That same figure caps what you can recover if the property is lost or destroyed, and caps damage liability at the lesser of that price or the reasonable cost of repair. Minn. Stat. § 325F.95, subd. 1.

The rental-purchase sections also carry concrete charge limits you can check against a signed contract. Under Minn. Stat. § 325F.91, a rental-purchase agreement may not require a confession of judgment, waive a defense or counterclaim, require a separate payment to acquire ownership other than the early purchase option, or authorize a penalty for early termination. A late charge is barred until a payment is delinquent for more than two business days on a weekly lease or three business days on a monthly lease, and may not exceed the greater of five percent of the delinquent payment or $3. Delivery charges are capped at $15 for five items or less and $30 for more, no security deposit may be charged, and a payment-pickup charge is capped at $7 and stands in lieu of a late charge for that period.

Enforcement runs through two channels. A lessor who violates the disclosure, form, and advertising sections (§§ 325F.86 to 325F.88) “is subject to the penalties and remedies provided in section 8.31,” and a violation of sections 325F.90, 325F.91, or 325F.93 “shall be treated as a violation of section 325F.69,” with remedies that “are cumulative and shall not be construed as restricting any remedy that is otherwise available.” Minn. Stat. § 325F.97, subds. 1, 2. That cumulative clause reaches those three sections rather than the whole act. A lessee already in default may still assert a violation in an original action, or as a defense or counterclaim when the lessor sues to collect, though the lessee may not offset an unadjudicated claim against what is owed. Minn. Stat. § 325F.97, subd. 3.

For questions about rent-to-own contracts, lease renewals and rent adjustments, or rent acceleration clauses, contact a Minnesota real estate attorney.

For more on real estate law, see our Real Estate practice area.

Addendum: Full Text of Miller v. Colortyme, Inc.

Editorial note: the opinion below is reproduced as it was decided on June 24, 1994. It quotes the 1992 edition of the Minnesota Statutes and describes the rental-purchase statute as it stood that year. Two provisions it names have since changed: Minn. Stat. § 325F.91, subd. 2, the cash price limits rulemaking directive, was repealed by 1995 Minn. Laws ch. 202, art. 3, § 22, and Minn. Stat. § 325F.98 was repealed by 1997 Minn. Laws ch. 7, art. 2, § 67. The rental-purchase sections the opinion names otherwise carry revisor history lines tracing them to 1990 Minn. Laws ch. 527, with one further change: section 325F.84, subdivision 1, which 1997 Minn. Laws ch. 7, art. 2, § 71 amended to end the section range at 325F.97. In Minn. Stat. § 334.01, subdivision 1 (the six percent and eight percent figures quoted in note 3) is unchanged since 1983, while subdivision 2 has been amended in 2002, 2008, and 2025.

Delilah MILLER, et al., Petitioners, Appellants,

v.
COLORTYME, INC., et al., Respondents.

Supreme Court of Minnesota.

June 24, 1994.

*545 Seymour J. Mansfield, Richard J. Fuller, Mansfield & Tanick, P.A., Mark N. Stageberg, Kay Nord Hunt, Lommen, Nelson, Cole & Stageberg, P.C., and David Ramp, Legal Aid Soc. of Minneapolis, Minneapolis, for appellants.

Jay M. Quam and Sue Halverson, Fredrikson & Byron, Minneapolis, for respondents.

Robert Hobbs, National Consumer Law Center, Inc., Boston, MA, William Crowder and Susan Bedor, Crowder & Bedor, St. Paul, for amicus curiae Nat. Consumer Law Center, Inc.

*546 Elmer B. Trousdale and Christopher M. Scotti, Oppenheimer, Wolff & Donnelly, St. Paul, for amicus curiae Minnesota Retail Merchants Ass’n.

James E. Rolshouse, Minneapolis, for amicus curiae Minnesota Ass’n of Rental Dealers.

Jarvis C. Jones, Minneapolis, for amici curiae N.A.A.C.P., the Urban Coalition of Minneapolis, the Minneapolis Urban League, Matthew Little and Gleason Glover.

H. Theodore Grindal and Joseph Musliek, Opperman, Heins & Paquin, Minneapolis, for amicus curiae Ass’n of Progressive Rental Organizations.

David Woodward, St. Paul, for amicus curiae Atty. Gen., State of Minn.

Heard, considered and decided by the court en banc.

Opinion

TOMLJANOVICH, Justice.

We are asked to decide whether “rent-to-own” transactions (also known as “rental-purchase” transactions) are consumer credit sales under the Consumer Credit Sales Act, Minn.Stat. §§ 325G.15 and 325G.16 (1992), and if they are consumer credit sales, whether they are subject to the interest rate limitations of the general usury statute, Minn. Stat. § 334.01 (1992). The court of appeals held that rent-to-own agreements entered into by respondents are not consumer credit sales and are not usurious. We reverse and remand.

Respondent D.E.F. Investments, Inc. and its subsidiaries operate several rent-to-own dealerships in Minnesota. They do business under the trade name “Renter’s Choice Home Furnishings.” DEF uses standard form contracts to lease new and used furniture, televisions, appliances, and various other consumer goods to customers. Under these contracts, which are similar to others used in the rent-to-own industry, customers elect to rent items for a weekly or monthly rental term. At the end of each term, customers have a unilateral option to renew the agreement for another term. If a customer renews an agreement for a specified number of terms, the customer obtains title and ownership of the item rented for no additional consideration. Full payment of the rental fee must be made before or at the beginning of each term. In order to acquire ownership of an item, consumers ordinarily must pay a total price far in excess of fair market value. DEF does not offer consumer items for immediate sale.

Appellants Delilah Miller and Craig Stenzel both have entered into rent-to-own contracts with DEF over a period of several years. For example, on December 18, 1990, Miller entered into a rent-to-own transaction with DEF for a used washer and dryer, the stated cash price of which was $800.75. Under the contract, Miller could acquire ownership of the washer and dryer by making 16 monthly payments of $84.40, for a total of $1,350.40, or by making 69 weekly payments of $21.10, for a total of $1,455.90. As a further example, on October 17, 1990 Stenzel entered into a rent-to-own transaction with DEF for a 19″ color television, the stated cash price of which was $470. Under the contract, Stenzel could acquire ownership of the television by making 18 monthly payments of $47.70, for a total of $858.60, or by making 78 weekly payments of $12.75, for a total of $994.50. Some of the contracts Miller and Stenzel have entered into have resulted in completed purchases; others have not.

On April 7, 1992 appellants Stenzel and Miller filed a class action lawsuit against DEF seeking monetary damages as well as declaratory and injunctive relief. In the relevant counts of appellants’ complaint, appellants allege that DEF has violated various consumer protection statutes by failing to treat rent-to-own transactions as credit sales under the Consumer Credit Sales Act, and that DEF has engaged in usury in violation of Minn.Stat. § 334.01. On August 3, 1992, appellants moved for partial summary judgment, asking for a declaratory judgment that respondents’ contracts constitute credit sales. On August 5, 1992, DEF moved for partial summary judgment, seeking dismissal of appellants’ usury claim.

On November 30, 1992, the district court filed an order which granted appellants’ motion for summary judgment and declared *547 contracts entered by “Class One”[1] to be “consumer credit sales for all purposes within the meaning of Minn.Stat. § 325G.15 and 325G.16.” The court also denied DEF’s motion for summary judgment and instead granted summary judgment for appellants on their usury claim, reserving the measure of damages for the fact finder.

After granting discretionary review, the court of appeals issued an opinion on August 3, 1993, reversing the district court. Miller v. Colortyme, Inc., 504 N.W.2d 258 (Minn. App. 1993). The court of appeals held: (1) DEF’s rent-to-own agreements are not “consumer credit sales” for all purposes within the meaning of Minn.Stat. §§ 325G.15 and 325G.16, and (2) DEF’s agreements are not usurious under Minn.Stat. § 334.01. While not reaching the issue, the court of appeals further suggested that the Rental Purchase Agreements Act (RPAA), Minn.Stat. §§ 325F.84-.98, is in substantial conflict with the Consumer Credit Sales Act (CCSA), Minn.Stat. §§ 325G.15 and 325G.16, and that the provisions of the RPAA are controlling. This appeal followed.

I.

We consider first whether the CCSA defines rent-to-own agreements as consumer credit sales, thereby departing from the common law distinction between leases and sales in order to provide the same protections to consumers who engage in rent-to-own transactions as to consumers who engage in traditional credit sales. At common law a rent-to-own transaction is regarded as a lease and not a sale because a buyer is not bound to pay the total purchase price and can terminate a transaction at any time by returning the property. See Samuel Williston, The Law Governing Sales of Goods at Common Law and Under the Uniform Sales Act, § 336 (1948). Prior to enactment of the CCSA this court followed the common law distinction. Hughes v. Becker, 260 Minn. 83, 87, 108 N.W.2d 781, 783 (1961).

The CCSA was originally enacted in 1971 [Act of May 14, 1971, ch. 275, § 1, 1971 Minn. Laws 488-90]. In 1981 the legislature amended Minn. Stat. § 325G.15, subd. 5 of the CCSA to define certain terminable leases as a “sale of goods.” Act of March 27, 1981, ch. 10, § 1, 1981 Minn.Laws 18-19. Under the amended version of Minn.Stat. § 325G.15, subd. 5, the term “sale of goods” includes:

a contract in the form of a terminable bailment or lease of goods if: (a) the bailee or lessee has the option to renew the contract by making the payments specified in the contract; (b) the contract obligates the bailor or lessor to transfer ownership of the property to the bailee or lessee for no other or a nominal consideration upon full compliance by the bailee or lessee with the bailee’s or lessee’s obligations under the contract including any obligation incurred by reason of the exercise of an option by the bailee or lessee to renew the contract; and (c) the payments contracted for by the bailee or lessee, including those payments pursuant to the exercise of an option by the bailee or lessee to renew the contract, are substantially equivalent to or in excess of the aggregate value of the property and services involved.

It is undisputed that DEF’s contracts satisfy each of the above criteria and therefore constitute a “sale of goods” within the meaning of Minn.Stat. § 325G.15, subd. 5. First, under DEF’s contracts the lessee has the option to renew the contract by making advance rental payments at the beginning of each rental term. Second, the contracts obligate DEF to transfer ownership to the consumer if the consumer renews the agreement for a specified number of payments. Third, the total payments necessary to acquire ownership exceed the value of the property and services provided by respondents.

Given that rent-to-own contracts are “sales of goods” within the meaning of Minn. Stat. § 325G.15, subd. 5, the question is whether they are protected “consumer credit sales” within the meaning of Minn.Stat. § 325G.15, subd. 2. Under Minn.Stat. § 325G.15, subd. 2, a “consumer credit sale” is defined as:

*548 [A] sale of goods or services in which (a) credit is granted by a seller who regularly engages as a seller in credit transactions of the same kind; (b) the buyer is a natural person; and (c) the goods or services are purchased primarily for a personal, family or household purpose, and not for commercial, agricultural, or business purpose.

The court of appeals concluded that DEF’s rent-to-own transactions are not protected “consumer credit sales.” It reasoned that DEF does not grant credit to customers because customers prepay for use of leased goods with no further obligation. Miller v. Colortyme, 504 N.W.2d at 260.

We believe rent-to-own transactions are “consumer credit sales” within the meaning of Minn.Stat. § 325G.15, subd. 2. The object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature. By defining certain terminable leases as “sales” within the CCSA, the legislature has made clear its intent to subject these terminable leases to the same consumer protection laws as ordinary credit sales. There is no conceivable reason why the legislature would amend Minn.Stat. § 325G.15, subd. 5 to define certain terminable leases as sales if it did not intend such leases to be protected “consumer credit sales” within the meaning of Minn.Stat. § 325G.15, subd. 2. The interpretation of the CCSA adopted by the court of appeals renders meaningless the language in Minn. Stat. § 325G.15, subd. 5 defining certain terminable leases as sales.

DEF argues that a seller cannot be deemed to have extended “credit” in the absence of a buyer who has incurred debt. The word “credit” can have different meanings in different statutes and we do not believe it is appropriate to apply a narrow definition of credit in this context. The manifest purpose of the Consumer Credit Sales Act is consumer protection. As a remedial statute, it is entitled to a liberal construction to promote, not frustrate, its objectives. Governmental Research Bureau v. Borgen, 224 Minn. 313, 28 N.W.2d 760 (1947). The legislature has specifically defined the transactions at issue as sales, despite their terminable nature. Sales are ordinarily regarded as “credit sales” where a buyer acquires possession but is allowed to defer full payment. See Black’s Law Dictionary 369-70 (6th Ed.1990). Accordingly, we hold that rent-to-own transactions are credit sales within the meaning of Minn.Stat. § 325G.15, subd. 2 because buyers of goods are not required to make full payment upon acquiring possession but are allowed to pay for goods sold over time.[2]

II.

Minn.Stat. § 325G.16, subd. 4 provides that “[a]ny lease or bailment of goods which constitutes a consumer credit sale shall be deemed to be a sale for all purposes.” Because rent-to-own agreements are consumer credit sales for all purposes, they are subject to the same consumer protection laws as ordinary credit sales, including the general usury statute, Minn.Stat. § 334.01.[3] We must decide whether the district court erred in holding that respondents’ contracts are usurious as a matter of law and granting summary judgment for appellants.[4]

*549 We have held that four elements must be proven to establish a violation of the usury law:

(1) a loan of money or forbearance of debt,

(2) an agreement between the parties that the principal shall be repayable absolutely,

(3) the exaction of a greater amount of interest or profit than is allowed by law, and

(4) the presence of an intention to evade the law at the inception of the transaction.

Citizen’s Nat’l Bank of Willmar v. Taylor, 368 N.W.2d 913, 918 (Minn.1985).[5]

DEF argues that its rent-to-own contracts are not usurious because they do not involve a forbearance of debt and do not impose an absolute obligation to repay a principal amount. In usury law, the term “forbearance” signifies the “contractual obligation of a lender or creditor to refrain, during a given period of time, from requiring the borrower or debtor to pay a loan or debt then due and payable.” Rathbun v. W.T. Grant Co., 300 Minn. 223, 233, 219 N.W.2d 641, 648 (1974). We agree with DEF that rent-to-own consumers technically do not incur any debt because they pay in advance for each rental period and are never obligated to renew an agreement. We also agree with DEF that a rent-to-own consumer technically has no absolute obligation to repay a principal amount. We disagree, however, that the first two common law elements of usury can be applied here to defeat appellants’ usury claim where the legislature has defined rent-to-own transactions as “consumer credit sales” for all purposes.

The purpose of the usury law is to protect consumers by limiting the amount of interest which can be charged on a credit sale or loan. The first two common law elements of usury serve merely to clarify what transactions are subject to interest rate limitations. By defining rent-to-own transactions in the CCSA as “consumer credit sales” for all purposes, the legislature has established that consumers who enter into rent-to-own transactions are to benefit from the same protections as consumers who purchase goods through ordinary installment sales, even though rent-to-own consumers do not actually incur any debt and do not have any obligation to repay a principal amount. The first two common law elements of usury are met by operation of statute.

The legislature’s decision to treat rent-to-own transactions as credit sales recognizes that although these transactions purport to be short-term leases, they operate in substance much like ordinary installment sales. Consumers who purchase goods through rent-to-own agreements may not incur debt, but they still implicitly pay interest in return for the ability to pay for goods over time. Moreover, rent-to-own customers may not have an absolute obligation to repay a principal amount, but their situation is analogous to that of ordinary buyers on credit in that they must either forfeit possession of a good or continue paying for it. See supra, note 2.

In addressing the scope of the usury statute, we look through the form to the substance of a transaction. Rathbun, 300 Minn. at 235, 219 N.W.2d at 649.[6]“There is no shift or device on the part of the lender to evade the [usury] law under or behind which the law will not look to ascertain the real nature and object of the transaction.” Adjustment Service Bureau, Inc. v. Buelow, 196 Minn. 563, 567, 265 N.W. 659, 661 (1936).

*550 Having determined that the first two elements of the common law usury test are met by operation of statute, we turn to whether the district court was correct in determining that respondents intentionally charged an excessive amount of interest. Under Minn.Stat. § 334.01, the interest for any legal indebtedness generally shall be no greater than six percent.[7] DEF acknowledges the large disparity between the cost of purchasing goods through its rent-to-own agreements and the value of the goods sold, but alleges that there is a factual issue with respect to whether it charged excessive interest, because the total value of goods and services (e.g., free delivery and maintenance) provided by DEF is disputed. We disagree. While there is some question as to the total value of services provided by DEF, DEF offered virtually no evidence to the district court as to the value of such services. Based on the record, we agree with the district court that no reasonable fact finder could conclude that the difference between the total payments required under the contracts and the value of the goods and services extended amounts to as little as six percent of the total payments. The district court properly concluded that DEF charged an excessive amount of interest as a matter of law.

DEF also argues that it did not have the requisite intent necessary to satisfy a usury claim because it acted in good faith and did not intend to violate the law. To be guilty of violating the usury law, a lender need only intend to charge a rate that is in fact usurious. It matters not whether the lender knows he is violating the usury law. Citizen’s Nat’l Bank of Willmar v. Taylor, 368 N.W.2d at 919. DEF does not claim that it intended to collect less money than is stated on the contracts, and therefore, as a matter of law DEF had the requisite intent.

Because no genuine issue of material fact exists as to whether DEF intentionally charged an excessive rate of interest, the district court properly granted summary judgment for appellants on their usury claim.

III.

We finally consider DEF’s argument that the Rental Purchase Agreement Act, Minn.Stat. §§ 325F.84-.98, has repealed the Consumer Credit Sales Act. The RPAA was enacted in 1990 and provides a number of protections to rent-to-own consumers. Among these, the RPAA provides for specified disclosures in the rent-to-own agreement, in advertising, and on in-store merchandise tags (sections 325F.86-.88); imposes restrictions and protections in the event of default (section 325F.89); provides for reinstatement rights to consumers (section 325F.90); limits delivery charges, security deposits and collection fees (section 325F.91); authorizes the commissioner of commerce to adopt rules governing cash price limits (section 325.91 [sic; the cash-price-limits rulemaking provision was Minn. Stat. § 325F.91, subd. 2, repealed by 1995 Minn. Laws ch. 202, art. 3, § 22]); prohibits identified abusive debt collection practices (section 325F.92); and provides for enforcement through both the Attorney General and a private right of action (section 325F.97).

The RPAA on its face does not purport to set up an exclusive system regulating rent-to-own contracts. Minn. Stat. § 325F.85 of the RPAA specifically addresses the relationship between the RPAA and the CCSA, and provides:

If the consumer protection provisions of sections 325F.84 to 325F.97 conflict with sections 325G.15 and 325G.16, sections 325F.84 to 325F.97 apply to a rental-purchase agreement and supersede sections 325G.15 and 325G.16.

Minn. Stat. § 325F.97, subd. 2 of the RPAA provides that the remedies under the RPAA [the subdivision’s own text limits this to the remedies provided by sections 325F.90, 325F.91, and 325F.93] “are cumulative and shall not be construed as restricting any remedy that is otherwise available.”

The RPAA’s legislative history further indicates that the RPAA was not intended to repeal the CCSA. As originally proposed, the RPAA would have explicitly excluded applicability of the CCSA. Amendments, however, were subsequently adopted which deleted the provisions repealing the CCSA and which substituted the present language of section 325F.85.

*551 Despite this statutory language and legislative history, DEF suggests that the RPAA impliedly repeals the CCSA. Under Minn.Stat. § 645.39 (1992), where a later law does not purport to establish an exclusive system covering an subject matter, a later law shall only be construed as impliedly repealing earlier laws on the same subject where the two laws are irreconcilable. A statute is to be construed, whenever reasonably possible, in such a way as to avoid irreconcilable differences and conflict with another statute. Erickson v. Sunset Memorial Park Assoc., 259 Minn. 532, 543, 108 N.W.2d 434, 441 (1961).

DEF points to a number of differences and conflicts between the CCSA and the RPAA, but none of these are irreconcilable. First, DEF notes that although the RPAA imposes express limitations on charges for certain items in rent-to-own agreements (e.g., delivery fees, security deposit, penalty for early termination), it does not impose an express limitation on the total amount that customers can be charged. DEF additionally notes that although the RPAA requires disclosure of the difference between the “cash price” and the amount of total payments, using the term “cost of lease services,” it does not impose any express limitation on what may be charged for lease services. The fact that the RPAA fails to impose any caps on total payments or on interest rates does not create an irreconcilable conflict with the CCSA because the consumer protections provided by the two statutes can be treated as cumulative.

Next, DEF argues that if the legislature intended rent-to-own transactions to be “credit sales” for all purposes, it would not have enacted a statute regulating such transactions which is replete with lease terminology. For example, in the RPAA, the person who rents personal property under a rent-to-own agreement is defined as the “lessee,” and the person who offers property for rent is defined as the “lessor.” Minn.Stat. § 325F.84. Use of terms such as “lessee” and “lessor” in and of itself does not create an irreconcilable conflict with the CCSA. The CCSA itself uses terms like “lessor” and “lessee” to describe rent-to-own transactions, only to further define these kinds of transactions as “sales of goods.” See Minn.Stat. § 325G.15, subd. 5.

DEF also points out that among the disclosures required by the RPAA, a customer must be told that she will not own the property until she has made the total payments necessary to acquire ownership of the property. Minn.Stat. § 325F.86(e). DEF argues that this provision conflicts with 325G.16, subd. 4 of the CCSA, which requires the lessor’s interest to be treated as a “security interest.” The disclosure requirement in the RPAA, however, is for the protection of the consumer and merely serves to ensure the consumer is made aware that absolute ownership will not pass prior to full payment.

DEF finally claims that the two statutes cannot be reasonably reconciled because, if the CCSA is deemed to impose an interest rate cap, this cap combined with the early-purchase option required by the RPAA would force defendants to sell their goods at below market value.[8] Appellants, however, cite a number of ways in which respondents can manipulate the contract terms to realize profits even if the early purchase option is exercised (e.g. by increasing the length of the initial rental period, requiring an initial downpayment, decreasing the number of payments necessary to acquire ownership), and in any event, lost profits is not a valid defense to a usury claim.

We conclude that the RPAA does not repeal the CCSA; rather the remedies in the two statutes are cumulative. We reverse and remand to the district court for further proceedings.

Notes

[1] The November 30 order grants appellants’ motion for class certification as to Class One. Class One consists of individuals who entered rent-to-own contracts after April 7, 1986 that provide for ownership at the end of a predesignated term without requiring an additional balloon payment.

[2] By defining rent-to-own transactions as “sales,” the legislature recognized that the economic reality of these transactions is like that of ordinary credit sales, despite their terminable nature. As the consumer of a rent-to-own product continues making weekly or monthly payments under the contract, the pressure to keep making payments and to exercise the purchase option grows until it becomes the only feasible rational choice, given the alternative of completely forfeiting all past payments and returning the goods.

[3] The usury statute provides, in relevant part: The interest for any legal indebtedness shall be at the rate of $6 upon $100 for a year, unless a different rate is contracted for in writing. No person shall directly or indirectly take or receive in money, goods, or things in action, or in any other way, any greater sum, or any greater value, for the loan or forbearance of money, goods, or things in action, than $8 on $100 for one year.

[4] There are several statutory exceptions to the general usury statute applying to specific types of credit transactions, but none of these exceptions are applicable to the rent-to-own agreements at issue. The rent-to-own contracts at issue also are not exempt from the usury statute under the judicially created time-price doctrine. This doctrine may apply where a seller fixes one price for cash and another price for credit. Respondents do not offer consumer items for immediate sale.

[5] Minn.Stat. § 334.011, subd. 2 (1992) provides that if a greater rate of interest than that allowed is charged then the entire interest due on that note, bill or other evidence of debt is forfeited. In addition, if the greater rate of interest has been paid, the person who paid it may recover in a civil action an amount equal to twice the amount of interest paid.

[6] In Rathbun, defendant offered for sale retail installment credit coupon books. A customer could purchase on credit a book of coupons in denominations ranging from 50 cents to $10, and totalling from $10 to $200, which could be used towards a purchase of merchandise at defendant’s stores. For coupon books sold after January 1, 1971 finance charges accrued after the first coupon was actually used, and all coupons could be returned at any time without charge. A customer who returned unused coupons was given full credit, including credit for finance charges attributable to the unused coupons. Even though the customer could return the coupons unused for full credit, the court held that the contracts were usurious.

[7] Minn. Stat. § 334.01 permits an interest rate of eight percent if the rate is contracted for in writing.

[8] Under the early-purchase option requirement, lessors must allow customers to acquire ownership of a property any time after the first periodic payment is made by tendering 55% of the difference between the total of scheduled payments and the total amount paid on the account. Minn.Stat. § 325F.93 (1992).