Economic fortunetelling is iffy business – luckily, rent-to-own is not
Making predictions about matters economic is most often a fool’s errand. Nevertheless, there are professionals whose job it is to do just that – economists. As a group, they’re about as accurate as bettors at the racetrack. But as modern life has reduced attention spans to nanoseconds, who remembers when predictions turn out to be completely wrong?
There is, of course, a world of difference between the current facts and the economic future. One current economic fact is that the count of “credit-constrained” or “financially fragile” American consumers is rising; according The Daily Mail, 47-million Americans are now considered “subprime borrowers,” which is 1.2 million more than a year ago. Fortunately, credit-challenged customers can benefit from rent-to-own – if rental dealers can figure out how to market their businesses effectively and get more feet through their doors and clicks on their websites. That, of course, is always a challenge, and an even more challenging one during tough economic times.
Consumers still have wants and needs, though their wherewithal to fulfill them seems to have eroded with rising prices across the board and practically stagnant wages (with the exception being California’s fast-food workers). While it may be debatable how much prices have risen, they are undeniably up, and everybody knows it – even if it’s politically inconvenient for some to have to acknowledge it.
The expansion of the subprime universe should mean more BOR and more revenue for RTO companies, who are part of this universe. But the current demand for consumer dollars is intense, so adding accounts is only half the battle. Dealers also must collect on those accounts, and – here’s a prediction you can safely bet on – collection is going to be trickier than typical because there are greater demands on fewer dollars.
Years ago, a Remco operations manager at an APRO meeting boiled it down this way: “Your customers have takehome pay of around $2,000 a month.
They also have around $2,400 of bills to pay per month. That means some people are not going to get paid what they’re owed. The trick is to make sure you’re at the front of the line when payments are being made. So you cannot sit back and just hope your customers are going to renew; you have to be active, and you have to be quick. If you’re not both, then you won’t get any money and you’ll have to pick up a TV instead.”
Naturally, there are rules about collecting. It can be difficult, but oh-so-necessary, not to get emotionally entangled with your merchandise. You must be patiently persistent, carefully walking the line short of oppression, harassment, or abuse. You must remember most people are honest and want to do the right thing – otherwise, RTO would not exist. It can be difficult if not impossible to know what might hurt a customer’s feelings. But that is nevertheless today’s collections landscape, and it’s unlikely to change anytime soon.
Some thinkers in the third-party debt-collection business have suggestions for handling today’s consumers.
They say every single case is different, so your collection approach should be customized to each consumer. For example, some folks still want to talk on the telephone, some prefer emails, some won’t respond to anything but texts, and many would choose to never hear from you, given their druthers.
The good news is, over time the rentto- own industry has carved out a proven and successful niche in the American marketplace. People are used to RTO – they understand how it works, and its benefits and flexibility are valuable for lots of people. Regardless of whether the U.S. government thinks it can run up debt into the trillions, ordinary Americans know they cannot, nor do they want to. The lack of debt in rent-to-own may be a more valuable benefit in today’s economic reality than ever, because the specter of debt is almost inescapable nowadays.
Irrespective of economic prognostication, if rental dealers will use heightened and focused attention at both ends of the transaction – renting and collecting – then they’ll surely continue to see a successful tomorrow.
Ed Winn III serves as APRO General Counsel. For legal advice, members in good standing can email legal@rtohq.org.
