Sixty-eight million Americans have bad credit scores, which means a credit score below 601 on a scale of zero to 800, according to a recent report. Another 45 million people have no credit history at all — or have histories so old they can’t be scored.
What are these folks to do when their fridge goes on the fritz or their mattress finally gives way — an outlay of at least $1,000? They can use a credit card, if they’re lucky enough to have one. Or they can pay cash which, in many cases, they don’t have. How, then, can they afford essential, but costly, consumer goods?
Until relatively recently, their options were pretty grim. They could try to find a loan, but that usually requires a good credit record and may incur an annual percentage rate of up to 36.99 percent. As a last resort, they might have to settle for a payday loan — and end up paying for a consumer good many times over.
Fortunately for consumers with terrible credit, they can apply for a lease-to-own loan. It requires simple qualifications: having a job, a bank account, and a minimal balance in that account.
If the loan is paid off within 90 days, it carries no interest whatsoever — just a nominal fee (at Simple Finance, it’s $40) due at the signing of the lease.
What are the advantages of the lease-to-own option?
If you’re among those tens of millions of consumers burdened by bad credit histories, you needn’t fret about putting off a much-needed big-ticket item. The increasingly popular lease-to-own alternative offers a form of financial deliverance. More and more merchants across country are offering this program. So, when you go into a store, ask if this option is available. If not, go across the street or across town to another merchant and find one who does.
Bray Brockbank is Vice President of Marketing for Simple Finance, a Salt Lake City, Utah, financial technology company offering alternative consumer lending solutions https://gosimplefinance.com