New PYMNTS Data Shows 20% of Durable Goods Buyers Use Lease-to-Own Programs 

Nearly 20% of U.S. consumers who acquired durable goods over the past 12 months did so using lease-to-own programs, PYMNTS research found. While those 34 million consumers tended to have fewer credit cards and lower credit scores, they also had access to personal loans, home equity lines of credit and second mortgages. 

The results are part of PYMNTS’ new Finding Retail’s Invisibles report done in collaboration with Katapult, which explains the payment option, identifies the consumers who use it and outlines the benefits to merchants that offer it. 

Among the findings, 73% of consumers said that lease-to-own allows them to obtain items they need right away, such as tires. 

“What many consumers don’t realize is that you don’t need to pay the entire sum up front,” retailer Tires-Easy said in a blog post, noting that new tires for a car are expensive but necessary. For those who can’t afford new tires, the company offers alternatives, including a lease-to-own option. 

Empowered to Purchase 

In addition, 75% of consumers said lease-to-own options were the only way they could afford to complete the transaction. Consumers with financial challenges select lease-to-own because they often prefer to use 100% financing rather than cash as a way to pay for durable goods. 

“Lease-to-own fitness equipment is a great way to work out now and pay later,” seller Expert Fitness Supply said in a blog post on its website. “Whether you have no credit history or bad credit, you can now be empowered to purchase the gym equipment you need for your home.”

Seventy-nine percent of consumers said that flexibility is the top reason they choose lease-to-own, as it allows consumers to make payments on a product over time while using it — along with early purchase options or the choice to return it without further obligation if it is no longer needed or wanted.

Bridge millennials and younger consumers are especially likely to embrace lease-to-own to obtain durable goods because of its flexible structure.

Opening up the Option

Merchants and retailers can tap into these consumer groups with the help of disruptive technology platforms that are opening up this option online and in-store.

And the market is large. By definition, durable goods are items that are built to last several years, and key categories that were acquired by a high percentage of consumers over the last 12 months include home appliances (40.6%), home furnishings (37.5%) and consumer electronics (34.7%). 

Lease-to-own programs enable retailers to tap into a greater share of this market by allowing consumers to choose to lease items they need and then return them, purchase the items at any point in the lease period, or own the items at the end of their maximum lease term. 

In addition to drawing in those consumers in the first place, there is another benefit to offering the lease-to-own option: PYMNTS research found that 66% of consumers who previously used lease-to-own options at checkout plan to use the option to shop again at some point.