Columnists, NBSRA, V5I1

Helping Customers Avoid Debt

During the past five years, credit card debt has risen 35 percent. The past year alone reflected an 11 percent rise. It is safe to assume that this trend will continue as we move into 2019. 

We live in a society where the value of a dollar is going down, while our appetite for possessions increases. It is no wonder rent-to-own (RTO) has become a sought-after alternative for many product manufacturers. 

Unlike traditional financing options, such as credit cards or bank loans, RTO agreements hold no necessary long-term obligation to the customer. They are not buying on credit or incurring any debt in the process of the agreement, unless they fail to meet the regular monthly rent while being in possession of the product. 

Rent-to-own is an alternative to financing with numerous unique values that traditional financing does not offer. The benefits to rent-to-own are numerous:

• It is a very flexible month-to-month agreement that allows the customer full use of a product while paying a minimal monthly rent payment. At the end of each month, the customer may choose to return the item or renew the agreement by making the next month’s rent.

•There is never any debt incurred by the customer if the terms of the agreement are met each month as intended. 

• RTO providers typically do not require a credit check, nor will any payment information be reported to the credit bureaus in the event an item needs to be retrieved either voluntarily or involuntarily. 

• In addition, many RTO agreements offer the customer a significant discount off the contract balance if they choose to purchase before the agreement completion date.

•It allows the customers the use of a large ticket item that they may not have the cash to purchase or insufficient credit history to qualify for with traditional financing options. 

• More importantly, the cancellation of an RTO agreement has no negative impact because the customer has assumed no credit obligation and this gives them freedom and flexibility in purchasing. 

• To cancel RTO agreements, the customer may simply call and request the item be picked up. The customer is no longer liable for any additional rental payments. 

•Permanent ownership of the item is received upon completion of the rental contract, through paying out the full term of the agreement or by taking advantage of buying early. The customer then obtains all ownership rights to the product. 

With so much evidence of traditional financing growth in America, offering an RTO program to your customers makes dollars and sense for your business.

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April/May 2024