At the intersection of the buy now, pay later (BNPL) revolution and the continuing quest for those with little or no credit to access better payment terms, lease with option to buy, a type familiar installment payments created for durable goods – from refrigerators to dishwashers to other household appliances – is re-energized amid the boom in alternative credit.

In Finding Retail’s Invisibles: Leaving Flexible Digital Payments to Reach Underserved Durable Goods Customers, a collaboration of PYMNTS and Katapult, researchers surveyed more than 2,120 American adults to find out how capital leasing fits into the credit mix. .

See more: 75% of consumers on option-to-buy rentals say it puts durable goods at their fingertips

The conclusions go straight to the heart of what drives the BNPL movement. “Consumers who choose to lease with the option to buy cited flexibility (79%) as the main reason. Leasing with an option to buy allows consumers to make payments on a product over time while using it – with options to buy it early or the choice to return it without further obligation, ”according to the study. .

“Many consumers also said that option-to-buy lease options were the only way for them to close the deal (75%) and that it allowed them to immediately get the items they needed (73%) .

See also: Finding the Invisibles of Retail: Leveraging Flexible Digital Payments to Reach Underserved Durable Goods Customers

Rental with option to buy and the loyalty effect

Like BNPL and its installment payment predecessors, option-to-buy leasing is known to create higher levels of consumer satisfaction with both the merchant and the brand, which leads to loyalty.

According to the study, “66% of consumers who previously used buy-to-buy leasing options plan to use the option to shop again at some point. This is compounded by another statistic: 43% of former users of the option-to-buy program see this option as an incentive to shop from a particular merchant. Almost 22% of all respondents said their willingness to shop is highest among merchants who offer option-to-buy rental programs. Millennials and bridge millennials are even more motivated to buy when a particular merchant offers a lease option with an option to buy (32%), as are consumers with low credit ratings (35%).

This roughly matches the effect BNPL has had with the growing number of merchants offering it as the 2021 winter giveaway season approaches. Like BNPL, leasing with the option of purchase has a strong appeal.

“When consumers need to obtain an expensive durable good and they don’t have credit or find that buying with cash would present a financial challenge, lease-to-buy options allow them to rent it out. ‘item instantly and make payments over time,’ the study states. “Typically, option-to-buy rental programs offer the consumer the option to purchase the item for as little as 5% above the spot price when the consumer exercises the option to purchase the item in advance. the three months following the consumption of the lease. “

Read more: Finding the Invisibles of Retail: Leveraging Flexible Digital Payments to Reach Underserved Durable Goods Customers

Traders have a lot to gain from leasing

As much as credit-distressed consumers love option-to-buy lease options, so too are merchants excited about its potential to retain buyers across the demographic spectrum.

“Millennials and Bridge Millennials (both 32%) and low-credit consumers (35%) are the most likely to say such offers will increase their willingness to buy. Our researchers learned that over the past 12 months, 25% of all consumers have also increased their willingness to buy from merchants who offer lease-to-buy programs, ”the study found.

Additionally, the researchers found that 27% of consumers “who have ever used a finance option for a durable goods purchase say they would be more willing to shop with merchants who offer capital lease options.” The appeal of such programs is high among millennials: 32% would be more willing to buy from merchants that offer these options. “

Read more: Finding the Invisibles of Retail: Leveraging Flexible Digital Payments to Reach Underserved Durable Goods Customers



On: Forty-seven percent of U.S. consumers avoid digital-only banks due to data security concerns, despite considerable interest in these services. In Digital Banking: The Brewing Battle For Where We Will Bank, PYMNTS surveyed over 2,200 consumers to reveal how digital-only banks can boost privacy and security while providing convenient services to meet this unmet demand.

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