CINCINNATI – The customer at the counter is young – mid-twenties or more – with a Bluetooth device in his ear and a smartphone in his hand. He chats with a Rent-N-Roll salesperson in Union Township about shiny wheels he’d like to buy for his thresher in the parking lot.
“That’s a sharp wheel, man,” salesman John Smith assures him.
Then Smith lays out the details: It would cost $ 60 per week after $ 112 less for the wheels and tires the customer was eyeing. To get the ball rolling, he would need a driver’s license, a social security card, proof of address, proof of income and vehicle registration.
“No credit check,” says Smith.
If the customer returns with the papers in hand, they will leave with a refreshed car and a contract to eventually own those expensive wheels and tires for around $ 240 per month.
But there is one catch that Smith didn’t mention, at least not at this point: the customer would end up paying a lot more than if they had saved up and bought the goods directly.
Rent-N-Roll is just one of many wheel and tire rental companies that are steadily growing in popularity nationwide. Like other option-to-buy rental business models, these marketing wheels and tires promise low weekly fees in exchange for the immediate gratification of having goods on hand otherwise out of reach.
People within the company say they are providing a service, giving people with credit difficulties the chance to brighten up their cars in a way once reserved for athletes and rock stars.
But consumer advocates warn that consumers who fail to make their payments risk finding their cars on cinder blocks, hampering the ability to get to work and putting their livelihoods at risk.
“If your sofa is taken back, the alternative is for you to sit on the floor. If your tires are taken back and your car is cinderblock, it’s a huge blow to a cash strapped family,” said Kalitha Williams of Policy Matters Ohio, a nonprofit organization. policy research organization.
Rent-N-Roll is one of the largest tire and wheel rental companies in the country. Founder Larry Sutton of Tampa, Fla., Said he had worked in the traditional option-to-buy rental industry – such as in appliances and furniture – for about 30 years before selling his stores to the late 90s.
In October 2000, he opened his first Rent-N-Roll, joining a business that made less than $ 1 billion a year nationwide. Soon after, he said, things exploded.
In 10 years, the industry has quadrupled, bringing in about $ 4 billion per year. TV shows like “Pimp My Ride” and more recently “Counting Cars” have helped transform the custom wheels industry from one industry targeting drivers under the age of 30 to one with an average age of customers. 46 years old.
“The demographics have changed dramatically,” said Sutton The inspector during a telephone interview. “Wheels have become the way to make your car a little more chic, a way to fall in love with your car again.
“We thought he would get popular, but we had no idea he would get as big as he did,” added Sutton.
Richard May, spokesperson for the Association of Progressive Rental Organizations based in Austin, Texas, said wheels and tires make up less than 5% of the entire option-to-buy rental industry. Furniture is the biggest chunk, at around 35-40%, followed by electronics and appliances.
Forty-seven states have laws governing the operation of option-to-buy rental businesses, including Ohio, which enacted its law in 1988, May said. The laws require stores to “tell the customer how much money they’re going to end up paying,” he said.
Sutton’s business has grown to approximately 70 franchises in 21 states. At first, Sutton focused exclusively on shiny wheels and so-called performance tires. In 2010, as tire prices skyrocketed, it spread to passenger car tires.
“We started looking at the number of people buying used tires, and it was amazing,” he said. “When you look at this model, you find that a lot of people buy used tires because no one is willing to give them credit.”
Sutton saw an opportunity to grow, offering the no-credit check promise to people who needed everyday touring tires but would prefer to pay extra for the luxury of a new package that includes free roadside assistance. during the lease.
He declined to say how many tires were picked up at various franchises, but Sutton estimated that nearly 80% of tire customers end up owning the ones they have leased.
Tire experts say soaring oil prices have translated into higher rubber costs, making decent tires financially out of reach for some customers. Gone are the days of you having to walk into a tire store with $ 350 and have a high quality package fitted to your Chrysler.
Marvin Bozarth of Shelbyville, Ky., Based at Bozarth Tire Industry Consultants, said not only do tire rubber cost more these days, but the trend of larger wheels means trucks that once had 16-inch wheels. inches now sport 18-20 inches direct from the factory. “It takes more fatigue,” he said.
There isn’t a lot of data on average prices, but Sutton said Rent-N-Roll typically has 18-month contracts with customers. The sooner the customer pays the balance, the less he will pay overall. All transactions have an identical 120-day payment period, so customers who are able to collect the purchase price within three months pay no interest.
Between these 120 days and the 18 months of the contract, customers can pay off the balance of the tires at any time and be reduced by 50% of the remaining contract price. Customers who keep the 18-month plan will end up paying twice as much as they would within 120 days, Sutton said.
Williams, at Policy Matters, said the lease-to-buy model could work for some families with weak credit and immediate tire needs. But she urged people to read the fine print of the contract fully and consider how much cheaper it would ultimately be to buy the tires directly than to lease them. More importantly, she said consumers should make sure they can afford the weekly payments to avoid repossession.
May, of the National Option to Buy Rental Association, agreed. “It’s an unknown product, and the more people see it, the more popular it becomes,” he said. “Sure, do your research. It’s your tires that keep you going.”