What is the Rent To Own Industry and Where is it Going?

The $6.8-billion rent to own industry-or RTO-is relatively new to the American economy. The unique rent-to-own transaction sprang up in the 1960s in response to a growing consumer need for acquiring the use of household products without incurring debt or jeopardizing the family's credit. Rent-to-own customers come from all walks of life, desiring consumer durable goods in their homes without the long-term financial obligations associated with credit sales. What distinguishes rent-to-own from a retail credit sale is the term "rent." There is no interest charged to consumers, no credit checks involved and customers can return the merchandise at any time. This no-obligation, no-debt feature is the cornerstone of rental-purchase. It's easy, it's safe and it's hassle-free as free replacement, repair and delivery are included.

Rent-to-own industry profile

The rent-to-own industry is composed of dealers who rent furniture, electronics, major appliances, computers, wheels and tires, musical instruments, jewelry and other products with an option to buy. There are approximately 8,500 stores in all 50 states and Canada. RTO serves 3 million customers (households) a year.

Rent-to-own customer profile

The majority of rent-to-own customers are working Americans earning a weekly paycheck. Customers include students, temporarily assigned business executives, military personnel and in-transit families. What all customers have in common is that they have immediate needs for consumer household goods, but either don't want or can't accept long-term obligations; some customers have no access to credit arrangements.

Rent-to-own store profile

The average store has annual revenue of $716,000 and serves 360 customers each year.
Operating costs for rent-to-own businesses are higher than traditional retail because of rent to own terms: the ultimate return of merchandise, merchandise repair and replacement expenses,rto laws, and the need to continually market the industry's services to a rotating customer base. There are approximately 8,500 rent-to-own stores in operation, serving 3 million customers a year. A new product category-tires and wheels-has recently seen great success within the rent-to-own industry. APRO is currently developing independent statistics on this fast growing segment of the rent-to-own industry. Recent statistical data shows that the average rent-to-own wheels and tires category generated $721,000 in annual purchases per store per year.

Note: Musical instruments are another independent product category that is very successful applying the rent-to-own transaction. It is estimated that the musical instruments rent-to-own program generates $2 billion of annual revenue outside of the traditional rent-to-own industry cited in these statistics.

Rent-to-own transaction is the most flexible transaction in the marketplace today. The rent to own industry is a new economic model which is pioneering a whole new way of doing business, and rent to own terms are a new model of a contractual relationship. New rto laws are making the rto option more attractive to both vendors and renters.