Sears hasn’t had an easy time of it in recent years, but neither has its customers. The retailer has been trying out any way it can to create revenue and customer traffic, and its latest plan is a lease-to-own program.
The Associated Press reports that Sears tried out allowing customers to pay in installments for big purchases such as mattresses, home appliances, furniture and electronics in 10 stores last fall and is now introducing the option at all of its 900 locations, making it the first major retailer to have such a program.
Sears began offering layaway only a few years ago during the worst of the recession, but lease-to-own would provide a way to move inventory and bring in revenue simultaneously. For customers in a bind, the lease-to-own programs allows quick access to products, unlike layaway, which needs to be paid off before pick-up. Products need to be worth $280 or more and customers aren’t allowed to sign on unless they are at least 18, can show that they make $1,000 or more a month, and have a Social Security or tax ID number.[more]
“Over the last three to four years, it has become difficult for our customers to have access to credit and to get new credit,” said Jai Holtz, vice president of financial services at Sears Holding, to the AP. “The program gives a much-needed financial solution to those unable to purchase on credit, secure credit, or because of immediate need, can’t use layaway.”
One of the plusses of the plan, according to DailyFinance, is that there is no interest involved so customers won’t be hit by hidden fees that raise the price of the product exponentially. “Customers will be charged the same price as someone buying the item outright, and all rent payments will be deducted from the final purchase price,” the site reports. “After five months of monthly or biweekly payments, the customer will have the option of paying the balance and owning the product. If they’re not ready to do so, they can continue making payments until 18 months after the time of purchase.”
Since the program went so well during testing, Holtz said that Sears is considering if it should also start the lease-to-own program at its Kmart stores. As of now, DailyFinance notes, the most popular items being leased for eventual ownership are refrigerators and—you guessed it—lawn tractors.