Rent-to-own, payday loans up income bracket
Payday loans aren’t the only short-term consumer credit service that is growing in popularity with higher-income consumers these days. According to Maria Halkias of The Dallas Morning News, rent-to-own stores like Rent-A-Center (America’s largest) are seeing more higher-income customers than they have in years. This is an expected byproduct of the current recession: Rent-A-Center’s year-end figures actually exceeded expectations.
Similar results have been reported in the pawn shop industry. Such returns have even prompted many cash advance outlet stores to expand their offerings to include pawn services. Some have also ventured into the buying and selling of gold, which makes particular sense when the value of the U.S. dollar is low. Cash America Director of Public Relations Yolanda Walker said people are finding “creative ways to make ends meet.”
Sign of the times
The trend of Rent-A-Center, payday loan stores and pawn shops looks to continue as the economy suffers. The need for credit doesn’t sleep, and more people are being rejected by traditional (bank) financing avenues. Halkias finds that current Rent-A-Center customers have “average household incomes in the $20,000 to $50,000 range.”
Yet with current economic burdens such as they are, renting a replacement refrigerator for $17.99 a week is what the average family can afford. Buying a new one can be a distant dream. Similarly, when emergency funds are needed in a pinch and traditional banking fails to fill the bill, consumers can rely upon payday loans for their speed, convenience and discretion. Moreover, rates that are commonly in the $15 to $20 per $100 range for two-week loans are much more affordable than the distressingly common alternative of relying upon checking overdraft protection.
Rent to own companies have been around for a long time. People who live off of a budget find this way of purchasing a lot more practical. Who needs to spend hundreds of dollars on a new washer when you can rent it on a low monthly fee? You don’t have to take a huge bite out of your budget and the monthly payment can easily fit in.
It makes sense – the traditional method is to finance through the store, pay cash up front, or use the credit cards. Well, if your credit card payment were to go up as much as it can on a charge for a new fridge – over $100 – spending $30 a month from a rent to own store makes more sense during a time when people are trying to save money. Besides, I think by now those Wall Street boys with the banks and card companies have gotten enough of our money by now, haven’t they?