The Benefits of Offering Rent to Own to Your Customers
I remember reading several years ago that over 70 percent of Americans have less than $700 available cash. Consider the implications for you if this figure is even remotely accurate. What is the price of your average shed? $2,500 to $3,000? That is way over $700. If we are expecting people to pay cash for our products, we are marketing to less than 30 percent of the people driving past on the street. Could this really be true?
In sales, it’s a challenge to remember to sell the way the customer wants to buy—not the way we would buy. If people don’t have the full cash to purchase our product and they ask us if they can make payments, are we going to sell to them or are we going to let the guy down the street sell to them?
Why offer rent-to-own (RTO) when the customer could get a loan from the bank? With current interest rates where they are and the typical spread, most banks really do not want to take on a $3,000 loan. To avoid loans like this, they say things such as, “Only for our current customers,” “We need a high credit score,” or “We need a larger down payment.” These are all reasons you have heard before. Most of these are also reasons to create the best possible contract.
Rent-to-own has no credit check, which allows you to sell far more product with a low upfront cost for the customer. With RTO, no credit is pulled on the purchaser, and you have the ability to close the sale immediately. The product belongs to the rent-to-own company. This lowers the risk for any pickups and gives the majority of the rights to the rent-to-own company for egress and access to retrieve the product for resale if the customer becomes unable to make timely payments.
If the customer is renting a storage unit, the RTO price may be slightly higher, but that is not the whole story. It doesn’t take long to make all the payments, and then the product belongs to the customer. What a win for the customer when they own the product outright and have no additional monthly payments. Renting a storage unit for year after year just doesn’t compare to that satisfaction.
Another tremendous opportunity with rent-to-own is that the customer can return the product at any time during the agreement. In most states, the rent-to-own agreement is a month-to-month agreement, which allows the customer to return or upgrade their product if they are current with all payments.
As in any business, customer relations are important. It is critical to ensure that the customer is aware that he or she is signing a rental agreement, and to confirm that all documents are filled out properly. Neither you nor the customer wants any surprises during the agreement. Like in any successful business dealing, good communication regarding the rent-to-own agreement is a must.
As you have probably been starting to realize, RTO is a good business opportunity where all parties win. The customer wins because they get the product immediately and can store their property in their backyard. After a short time of rental payments, they have right to ownership.
The dealer wins because they sell more products, usually at good markup. The manufacturer wins because they, of course, manufacture more products.
If those three parties have won, then the rent-to-own company also wins by receiving good contracts. Rent-to-own is a good program that can please all parties involved: win-win-win-win.