What’s the Rent to Own Industry All About?

The rent to own industry is a $7 billion dollar a year business which is growing by leaps and bounds. The rent to own transaction is a unique form of financing which permits consumers to acquire the immediate use of needed household appliances, electronics, furniture, computers, and auto supplies without incurring any debt, or jeopardizing their credit. Rent to own customers are found in all walks of life and financial levels. What they have in common is the desire to obtain big-ticket durable goods without assuming the long term financial obligations required by credit sales. The distinguishing characteristic of rent to own is the word “rent”. No interest is charged the consumers, there are no credit checks, and customers are free to return the merchandise at any time, for any reason, without any penalty. The no obligation, no debt feature of rent to own makes it an easy, safe, and hassle-free option (free delivery, repair, and replacement are included). Customers can change the terms of the agreement and size of payments at any time in response to changes in their financial situations.

Who uses rent to own? RTO surveys show that over two-thirds of customers choose to make weekly payments, and a third opt for biweekly or monthly payments. Most RTO customers are middle-aged (2/3 are between 35 and 54 years of age); Caucasian (84% vs. 15% Afro-American); high school graduates (with 40% of all customers having gone on to college). Two-thirds are women and a Lender men; two-thirds earn between $15,000 and $36,000 annually (only 15% earn less than $15,000); and over two-thirds own their own homes. So, the stereotype of the RTO industry serving mostly poorer consumers is clearly not true: quite the contrary, in fact. Nationwide, about 8,600 rent to own stores serve over 4 million customers annually. The rent to own model has become so popular that it has expanded from durable household goods to industries such as jewelry, art, homes, musical instruments, bicycles, automobile supplies, lawnmowers, etc.

On average, rent to own stores earn $736,00 annually, serving 360 customers. Because of merchandise returns, repairs and replacement, and the cost of rent to own training, the operating costs for rent to own are higher than those of traditional retail. The overwhelming majority of RTO customers (three-quarters) return their rental item within four months. 1/6 exercise early payment, or 90-days-same-as-cash options. Only 8% of customers carry their rent to own agreements to full term. Previously-rented items are refurbished, and then rented again at reduced rates. All rental agreements clearly explain the total dollar amounts and number of rental payments to be made – this consumer disclosure is mandated by state law, and overseen by APRO, the industry advocacy and watchdog group.

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