Legislative Activity

Information concerning our local state Rent-to-own businesses:

First, a little about “Rent-to-Own”…

1. We deal with thousands of customers every week. Of those customers, a LARGE majority are happy, satisfied customers. There is a very small minority of customers who are unhappy for one reason or another. As with any business, there are always some dissatisfied clients – we try very hard to minimize this percentage.

2. We primarily RENT merchandise to our customers. Despite assertions that rent-to-own is simply a disguised credit sale, the following facts are true: Customers are not obligated to rent anything beyond the first month. At any time, the merchandise can be returned with no further obligation. Many customers do so – nationwide, only about 25% of initial agreements are “bought-out”. This means that 75% of the agreements end up being returned or exchanged.

3. Contrary to popular belief, rent-to-own companies do not “prey” on the poor or unfortunate. Rather, we give people with a bad credit history, a chance to have “things” that they could not otherwise have. For example, many people who have a poor credit history are also not good at saving money. So, if their refrigerator went bad and they had to replace it – we are there to help. Whether for a short-term rental, or long term rent-to-own, it prevents that consumer from having to purchase a discounted used refrigerator which may not have a warranty, and may not work for very long. Again, if someone WANTS a 50” plasma TV… with no credit and no cash, they have few options. If he or she WANTS the TV, we give them that option.

4. No long-term obligation. In today’s world, rent-to-own options are more relevant (and in fact sought after) than ever. Our customers have no long-term credit obligation. If they run into financial difficulty, and have trouble paying their bills, they simply choose which items are least important to them – and return those items to us. Their obligation is immediately terminated – no further bad credit ratings, no creditors hassling them for money they don’t have

5. Lifetime reinstatement. Most rental companies offer lifetime reinstatement. This means that, should the customer choose to return the 50” plasma TV mentioned above, for whatever reason… he or she can always come back and re-rent the same or a similar TV and continue where the agreement ended (same “buy-out” price, same number of weeks remaining, same weekly/monthly payment).

Some other important points…

1. Some would argue that our retail prices are too high. However, considering that most rental companies are small businesses, we actually mark-up our products in a similar fashion to most retailers – we just have to pay more than they do, so the end price does end up higher in some cases. In any event, the retail price is clearly marked on all merchandise – consumers can comparison shop as they desire.

2. Some complain that if a customer rents-to-own a product, he/she will pay double the price.
a. Double-the-price is the MAXIMUM he/she could pay (by PA statute). If one understands the rent-to-own transaction, he would also realize that every consumer who rents-to-own will actually pay less than this maximum amount (using the early buyout option – again mandated by PA statute).
b. Most customers choose to “buy-out” the merchandise well before the maximum term, and thereby reduce their cost of leasing. The cost of leasing is the amount paid over-and-above the cash/retail price.
c. In exchange for this “cost of leasing” and the relatively high retail prices, consumers receive MANY services – including (typically) free delivery and setup of merchandise, free pick-up, free moves, the ability to return the merchandise and/or exchange it, free service during the rental term, free loaner merchandise while service is being performed, many different payment options, including payment pickup, etc.

 

The industry website: www.rtohq.org
Independent research on Rent-to-Own: http://www.rtohq.org/apro-658.html

Economic Impact of RTO in PA: 257 rent-to-own stores, 1542 employees, $53,900,000 annual wages, $8,300,000 annual payroll taxes, $189,100,000 annual revenues

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