Almost 20% of U.S. customers who acquired sturdy items over the previous 12 months did so utilizing lease-to-own applications, PYMNTS analysis discovered. Whereas these 34 million customers tended to have fewer bank cards and decrease credit score scores, in addition they had entry to private loans, residence fairness traces of credit score and second mortgages.
The outcomes are a part of PYMNTS’ new Discovering Retail’s Invisibles report carried out in collaboration with Katapult, which explains the fee choice, identifies the customers who use it and descriptions the advantages to retailers that supply it.
Among the many findings, 73% of customers stated that lease-to-own permits them to acquire objects they want instantly, akin to tires.
“What many customers don’t notice is that you just don’t have to pay the whole sum up entrance,” retailer Tires-Simple stated in a weblog submit, noting that new tires for a automotive are costly however crucial. For many who can’t afford new tires, the corporate affords alternate options, together with a lease-to-own choice.
Empowered to Buy
As well as, 75% of customers stated lease-to-own choices have been the one method they might afford to finish the transaction. Customers with monetary challenges choose lease-to-own as a result of they typically choose to make use of 100% financing somewhat than money as a method to pay for sturdy items.
“Lease-to-own health gear is an effective way to work out now and pay later,” vendor Skilled Health Provide stated in a weblog submit on its web site. “Whether or not you don’t have any credit score historical past or very bad credit, now you can be empowered to buy the health club gear you want on your residence.”
Seventy-nine % of customers stated that flexibility is the highest cause they select lease-to-own, because it permits customers to make funds on a product over time whereas utilizing it — together with early buy choices or the selection to return it with out additional obligation whether it is now not wanted or wished.
Bridge millennials and youthful customers are particularly more likely to embrace lease-to-own to acquire sturdy items due to its versatile construction.
Opening up the Possibility
Retailers and retailers can faucet into these shopper teams with the assistance of disruptive know-how platforms which are opening up this feature on-line and in-store.
And the market is giant. By definition, sturdy items are objects which are constructed to final a number of years, and key classes that have been acquired by a excessive proportion of customers during the last 12 months embrace residence home equipment (40.6%), residence furnishings (37.5%) and shopper electronics (34.7%).
Lease-to-own applications allow retailers to faucet right into a larger share of this market by permitting customers to decide on to lease objects they want after which return them, buy the objects at any level within the lease interval, or personal the objects on the finish of their most lease time period.
Along with drawing in these customers within the first place, there may be one other profit to providing the lease-to-own choice: PYMNTS analysis discovered that 66% of customers who beforehand used lease-to-own choices at checkout plan to make use of the choice to buy once more sooner or later.