‘Ubiquity Of Access’ Drives Growth At Rent-A-Center’s Preferred Lease Unit

At a time of huge digital transformation when consumers have quicker access to more products and services than ever, why be clunky if you can be seamless? So goes the thinking of Jason Hogg, the recently hired executive vice president of the Preferred Lease unit of Rent-A-Center, which is aiming to take the lease-purchase segment of the alternative credit market to the next level along with its recent acquisition of Acima.

“When I looked at the leasing and the lease-to-own space there was a lot of room for improvement. It was still clunky,” Hogg said to PYMNTS’ Karen Webster in a recent interview.

Not only were people “typing out 30 fields with their thumbs on their phone,” Hogg said, but the whole process of qualifying for and making purchases was archaic and full of friction. Essentially, it was time to build a better mousetrap that was native, accessible and fast.

“So we invented it,” Hogg said. “We’ve taken the [leasing purchase] experience from the countertop where folks had to go and go through this arduous process, to where now you put in the last four digits of your Social Security number, and from inception to having their lease-to-own line available to them takes as little as 38 seconds, down from 20 minutes.”

Serving Consumers, Helping Businesses

From a consumer standpoint, Hogg said, unlike traditional financing with installment loans or unsecured credit cards, people actually own what they buy, which can make a huge difference for customers who are often lower income, are unbanked, underbanked or have thin or no credit file.

“If you stopped paying a credit card bill or stopped paying your installment loans, your credit obviously is impacted adversely. With us, you have the ability to return the item,” Hogg said. “So if you decide that because of a change in circumstances, you’re unable to make the payments, you’re not stuck with this debt because it’s not debt, it’s a lease and so we have the ability for you to return it to any one of our 3,000 Rent-A-Center locations.”

However, when customers are making timely payments Preferred reports that the credit bureaus, which for some customers, may be the only credit history info they have.

“It’s an only-upside experience from a credit building perspective,” Hogg said.

At the same time, through its growing — and acquired — network of partner retailers, Hogg said the leasing platform is a boon for many small local businesses, as well as national chains that drives incremental customer base and incremental revenue growth.

“I would say [we provide] 15 to 20 percent incremental sales volume growth to merchants, because we are able to originate in this thin file, no file underbanked or unbanked segment where those consumers don’t have access to traditional financing alternatives,” he said.

Dignity And Ubiquity Of Access

There’s another side of the lease to own business that Hogg said is also important to know about. “We’re treating our customers with dignity,” he said.

Whether they’re in the market for a laptop in order to go to work or keep a kid connected with remote schooling, or simply trying to put new safe tires on their car, many of Preferred’s customers would not have the credit or cash on hand to make an unplanned purchase.

“Why is it that a consumer has to go through this process of being declined, declined, or not having access to the same goods and services that other people do, just because they’re unbanked or have a thin file or no file?” Hogg asked.

Instead, the ability to make those critical purchases, with as little as $49 down, can be life changing.

“Giving them that access in a seamless fashion versus having to go through 30 minutes of providing untold amounts of information and everything is important,” Hogg said. “So it’s treating them with dignity and empowering them like any other consumer.”

For business models like the lease-purchase or buy now pay later (BNPL) sector, the ubiquity of access in terms of payment options is an important differentiator. For some, that means setting up traditional monthly bank ACH or autopay options. For others, it can involve the use of prepaid cards, and in some cases, paying in cash at a retail location.

Huge Opportunity

Hogg said he gets a little wry smile on his face when he thinks about the potentiality to scale this lease-purchase business through an ambitious suite of services and products fueled by technology and low friction experiences that help to solve a buying problem for consumers and grows from there.

“It starts with a transaction and trust, and then grows into a relationship,” he said, “and from that relationship, we’re able to graduate them to products and services that will help empower them and continue to provide access.”

Although the business model itself is far from new, Hogg said replacing the clunky old version with the modern seamless variety will tap into a huge market.

“Our curated addressable universe that we have is over 50 million consumers,” Hogg said, and within that, what we already have our arms around today is over a hundred billion dollars in lease-to-own capacity that’s pent up.”