Consumers unable to afford new tires are turning to tire rental businesses, often paying double or triple the price of a new set of tires, according to the Los Angeles Times.
Like most of the rent-to-own sector, failure to make payments can result in high interest penalties or police repossession, the Times reported. Additionally, because the tires are loaned on a lease contract, they are treated as a secured financing transaction, so the borrower will need to keep paying to keep the tires even in bankruptcy.
These tire rental companies originally formed to provide custom rims and tires to a particular niche market, mostly comprised of young urban males. However, since the recession started, more average consumers are turning to these companies for their basic tire needs. And unlike other popular rent-to-own items like electronics, tires are a necessity in many Americans' lives.
Owners of the tire rental companies see themselves as filling a need for people who cannot afford to buy tires outright and are wary of buying used. "We see tremendous opportunity serving people who are just looking for dependable tires to get to work," said Larry Sutton, founder and president of the tire rental company Rent-N-Roll, in an interview with the Times. Rent-N-Roll has 66 locations nationwide and plans to open six more this year.
According to the Times article, the price of tires rose 57 percent between 2009 and 2012. And according to an NPR report, a 2009 tariff on Chinese import tires may have helped the rise of the tire rental industry. That tariff raised the price of tires almost 40 percent by the time the tariff was removed last October.
A couple featured in the Times article paid $54.60 a month for 18 months in exchange for four basic tires. That totals $982, almost triple what the tires would have cost new at Wal-Mart.
"I know you have to pay a lot more this way," explained Florence Cherry, who rented the tires, to the Times. "But we didn't really have a choice."
- The best Black Friday deals of 2014
- Working on Thanksgiving Day? Here's why most...
- 12 ways to get the lowest mortgage refinance...
- Our complete guide to Black Friday, Cyber...
- Thanksgiving trumps Black Friday for deals
- Why Salt Lake City is one of the best cities...
- 5 easy ways to make your money work for you
- Balancing act: Thanksgiving policies show...
- Working on Thanksgiving Day? Here's why... 12
- In our opinion: Fear, intentions can... 7
- Gift Guide: 3 ways to watch streaming... 4
- Ford's new F-150 to get 26 mpg, tops... 4
- Thanksgiving trumps Black Friday for deals 3
- Why Salt Lake City is one of the best... 2
- 5 reasons not planning could help you... 1
- How are holiday shoppers spending their... 1