We’ve all heard the warnings about rent-to-own programs (and the importance of living within one’s means), yet tens of thousands of Americans enroll in these programs each year to make a big ticket purchase they could likely do without – and Kmart wants in on the action. A recent article in the Chicago Tribune discussed the company’s decision to throw its hat in the ring.
Kmart Gets in Rent-To-Own Game
Beginning on November 22, the major retailer will offer a rent-to-own service to consumers who don’t qualify for credit in an effort to boost struggling sales. According to company executives, Kmart claims its total cost of ownership is much lower compared to current companies in the space and it is just looking to meet consumer demand. Over the last three months, same-store sales at Kmart, who merged with Sears in 2005, are down nearly four percent – a bad sign in a year when retailers are expecting small gains during the holiday shopping season.
Good vs. Evil
Critics of Kmart’s new program say that the company is running the risk of further damaging an already fragile brand. Additionally, the program saddles users with extremely high annual rates and in some cases, a large balloon payment at the end of the lease. Kmart argues that because it doesn’t mark up the initial price of the product like some rental centers, consumers benefit from paying a lower base cost. Although Sears claims that its rent-to-own program launched earlier this year has had more success than its competitors, the company declined to give numbers.
Our advice? Hold off on buying that big ticket item until you have the cash. Don’t let your eyes get bigger than your wallet.