NHFA offers rent-to-own program

Will serve "credit-challenged" consumers

Clint Engel -- Furniture Today, September 3, 2008

HIGH POINT - The National Home Furnishings Assn. is introducing new financing and other programs for its retailer members, including one that could let some stores dip their toes into rent-to-own waters.

The association said its board selected the new and updated programs "to help support profits in today's uncertain economy."

Among them is a Lease/Purchase Alternative Finance Program offered by 4Sales Finance, which provides a hybrid rent-to-own options for "credit-challenged" consumers who are declined by a store's primary credit sources, NHFA said. The agreements are set up as 12-month RTO plans, but customers can pay off the balance any time before that, said Jerry Alderman, NHFA senior director of membership and marketing.

Consumers can qualify if they have been employed for at least six months and have gross monthly income of at least $1,000.

While the program doesn't include short-term rental or lease contracts like those offered by some RTO operators, merchandise would come back to retailers if the customer defaults. That's a risk retailers will have to consider before offering the program, Alderman said.

"This type of program will be for retailer on the low to promotional side (aimed primarily at consumers) who would not quality for conventional financing," he said. "It just gives that retailer a chance to save that customer."

Alderman added that the pricing of the agreements would be comparable with those offered by RTO merchants.

NHFA also has introduced a new Furniture Protection Plan by 4Warranty that provides extended service plans for furniture, appliances and electronics and includes an aftermarket opportunity for income missed at the point of sale, NHFA said.

Both 4Sales Finance and 4Warranty are part of Source International of Orange Park, Fla.

Also new from NHFA is the Workers Compensation Audit Program, provided by L.B. Atlantic - which specializes in recovering workers' compensation premium overcharges - in partnership with the association. The retailer's annual premium must be more than $50,000 to qualify and under the program, the retailer will not be charged a fee if there is no overcharge recovery.

In addition, Citi Retail Services lowered its rates earlier this year for retailers who use its private label credit card program through NHFA. The basic rate for six-month and 12-month plans was lowered 50 basis points, or by 0.5% on the front end.