By Jia Wertz

Lease-to-own has become a key trend in the retail and e-commerce world. More and more brands are finding it to be a cost-effective way of attracting buyers who couldn’t otherwise afford their products. Making it a win-win on both sides.

Brands address their customers’ needs while appealing to a broader clientele. And for those consumers who don’t like relying on credit cards or may even have bad credit, lease-to-own finally gives them access to the products they wish to purchase. From electronics and furniture to household appliances, mattresses, and even jewelry, it’s all paid for in a convenient way over a period of time.

Overstock, for example, partnered with Progressive Leasing, a lease-to-own provider, to offer customers millions of items that can be paid for over 12 months.

“A third of the population is credit challenged,” said Blake Wakefield, President and Chief Revenue Officer of Progressive Leasing. “They don’t have options. They’ve been told ‘no’ time in and time out.”

With an initial payment of less than $50 and lease agreements that can go up to 12 and even 15 months, consumers can access products they wouldn’t otherwise be able to purchase.

By integrating this option in their e-commerce strategy, businesses can become more affordable, while exponentially growing their sales.

In 2018, around 30% of Americans with a valid FICO credit score had poor or bad credit. Another 13% had a “fair” credit score, which is still not considered good. On top of that, around one-fifth (22%) of adults had no credit score at all. This carries similar disadvantages as having bad credit when you’re looking for financing solutions.

Working with these numbers, more than 100 million Americans currently find it hard to purchase from retailers and e-commerce by swiping their credit cards.

Moreover, in this uncertain economic climate, people are starting to think twice before signing up for a credit card. According to the United States Census Bureau, more than 40% of Americans have an annual income below the median earnings of $48,328. This is a market largely overlooked by existing payment options.

The reality is that many people need credit but can’t access it. Or, if they do, they’re unwilling to put their credit scores at risk. This represents a significant segment of customers who are all-too-often ignored by retailers – people who want to make a purchase but don’t have a reasonable way of paying. People who can’t afford to pay for quality furniture or new appliances in one lump sum. If e-commerce platforms want to connect with these people and gain their trust, they need to build a convenient shopping experience that reasonably caters to their financial needs.

“Ensuring financing options for all types of customers including customers with good credit, evolving credit, and even no credit history is key to making sure you are serving everyone and not missing a potential sale,” said Orlando Zayas, CEO of Katapult, a lease-to-own platform. “Consumers will need financing now more than ever to get the products they need.”

Lease-to-own allows retailers to provide a no-credit-required alternative to customers who don’t qualify for traditional financing options. In return, businesses gain access to consumers that have largely been ignored by many market players for years.

Lease-To-Own Can Boost Online Sales 

These types of buyers can have a significant impact on your sales. According to Acima, provider of lease-to-own solutions, one of the company’s clients tripled its sales after introducing no-credit-needed financing in its brick-and-mortar location.

This flexible payment option creates growth opportunities for retailers, as it connects companies with an untapped consumer base – people who may be currently opting to buy secondhand items or simply not buying them at all.

To be clear, lease-to-own isn’t an option for everyone. You’re not looking to target people who don’t earn any money at all. You’re aiming for potential buyers on lower incomes that can’t afford big-ticket items in a single purchase. Most lease-to-own solutions are available only for people who can prove their work history and earnings. These consumers have jobs, but the only way they can afford to buy goods over a certain amount is if they can pay in affordable installments.

Ignoring a consumer base of over 100 million means leaving many business opportunities off the table. That’s why implementing a lease-to-own financial option can be beneficial to businesses in many ways.

Not only that, but businesses can also increase their brand awareness and build a reputation among a new audience, one that hasn’t been given many options until now.

Showing The Human Side Of Your Brand

Lease-to-own can also help you highlight the human side of brands. Not only does it create an opportunity for people to get what they need, but brands are also showing they care about their consumers’ finances. Having an alternative that allows people to pay at their own pace improves their self-esteem and gives them hope.

Studies have shown that consumers feel better about themselves when they buy status products. If you’re the brand that can help them get a new TV or beautiful furniture instead of secondhand items, they’ll remember you and come back for more.

Offering more flexible payment options allows retailers to build and consolidate new customer relationships and increase brand loyalty and customer retention, which leads to more sales and greater revenue in the long run.