Credit Tightening Underscores Need for Rent to Own Option

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The pending Credit Cardholders' Bill of Rights Act of 2008 (H.R. 5244) introduced in Congress provides greater consumer protections, but will most likely restrict millions of customers from being approved for credit, according to the Association of Progressive Rental Organizations. Less accessible credit means that the rent to own industry will become a much more popular option for millions of customers.

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When interest rates peaked in the 1970s, thousands of customers flocked to rent to own. It looks like those similar market conditions could happen again meaning even more customers will look to our industry for the best option to acquire furniture, computers, appliances and electronics.

The pending Credit Cardholders' Bill of Rights Act of 2008 (H.R. 5244) introduced in Congress provides greater consumer protections, but will most likely restrict millions of customers from being approved for credit, according to the Association of Progressive Rental Organizations Less accessible credit means that the rent to own industry which serves many of those who are "unbanked" will become a much more popular option for millions of customers.

Edward Yingling, president of the American Bankers Association, recently told MSNBC that he has "serious concerns" that certain aspects of this legislation, "would have unintended consequences, such as more expensive and less accessible credit." As a consequence, the no-debt rent to own transaction, in which approval is typically a matter of three solid references, would become an even greater option in the marketplace for millions of consumers. Currently the rent to own industry serves 3 million customers.

The $6.8-billion rent to own industry has steadily grown in the past three decades, serving a consumer niche with a flexible transaction that the customer controls at every step. If a consumer can no longer make the payments, then the product is returned at no penalty to the customer. The customer can re-instate his or her payments within a certain period typically governed by state laws, but most companies offer a "lifetime reinstatement" option for the consumer. Because of rent to own's flexible transaction, its improved pricing and professionalism, the rent to own customer base has grown by 300,000 customers in the past two years - during good economic conditions - and expects to grow even more with the potential of an unstable economy and tightening of credit.

"Rent to own became an industry in the 1970s when interest rates were sky-high," says Larry Carrico president of the Association of Progressive Rental Organizations, the national trade association for the rent to own industry. "When interest rates peaked in the 1970s, thousands of customers flocked to rent to own. It looks like those similar market conditions could happen again meaning even more customers will look to our industry for the best option to acquire furniture, computers, appliances and electronics."

Rent to own companies, through the Association of Progressive Rental Organizations (APRO), have spent more than 25 years improving business practices to become one of the fastest growing and vibrant industries both on Wall St. and with private small business. APRO is the national, nonprofit trade association advocating and representing the rent to own industry before the U.S. Congress, state legislatures, courts, media and the public. For more information, visit http://www.RTOHQ.org.

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