Can't afford new tires? Now you can rent them

Amber Hunt | The Cincinnati Enquirer

CINCINNATI -- The customer at the counter is young – mid-20s at most – with a Bluetooth device in his ear and a smartphone in his hand. He's chatting with a salesman of Rent-N-Roll in Union Township about some shiny wheels he's interested in buying for his beater in the parking lot.

"That's a sharp wheel, man," salesman John Smith assures him.

Then Smith spells out the details: It'd cost $60 a week after $112 down for the wheels and tires the customer has been eyeing. To get the ball rolling, he'd need a driver's license, Social Security card, proof of address, proof of income and the vehicle's registration.

"No credit check," Smith says.

If the customer comes back with the paperwork in hand, he'd drive away in a spiffed-up car and a contract to eventually own those expensive wheels and tires for about $240 a month.

But there's a catch that Smith didn't mention, at least not at this point: The customer would ultimately be paying a whole lot more than he would if he'd saved up and bought the goods outright.

Rent-N-Roll is just one of several rent-to-own wheel and tire businesses steadily gaining popularity nationwide. Like other rent-to-own business models, those marketing wheels and tires promise low weekly fees in exchange for the immediate gratification of having otherwise out-of-reach merchandise in hand.

People within the business say they're offering a service, giving credit-challenged people an opportunity to jazz up their cars in ways once reserved for athletes and rock stars.

But consumer advocates warn that consumers who fail to make their payments risk finding their cars on cinder blocks, hampering the ability to drive to work and putting their livelihoods in jeopardy.

"If your couch is repossessed, the alternative is that you sit on the floor. If your tires are repossessed and your car's on cinder blocks, that's a huge hit to a financially strapped family," said Kalitha Williams of Policy Matters Ohio, a nonprofit policy research organization.

Rent-N-Roll is one of the nation's largest rent-to-own tire-and-wheel companies. Founder Larry Sutton of Tampa, Fla., said he'd been in the traditional rent-to-own industry – as in household appliances and furniture – for about 30 years before selling his stores in the late '90s.

In October 2000, he opened his first Rent-N-Roll, entering a business that made less than $1 billion a year nationally. Soon after, he said, things exploded.

Within 10 years, the industry had expanded four-fold, bringing in about $4 billion a year. TV shows like "Pimp My Ride" and, more recently, "Counting Cars" helped transform the custom-wheel industry from one that targeted drivers under age 30 to one with an average customer age of 46.

"The demographics changed drastically," Sutton told The Enquirer in a phone interview. "Wheels became the way to make your car a little fancier, a way to fall in love with your car again.

"We thought it'd get popular, but we had no idea it'd get as big as it has," Sutton added.

Richard May, spokesman for the Association of Progressive Rental Organizations based in Austin, Texas, said that wheels and tires represent less than 5 percent of the overall rent-to-own industry. Furniture represents the biggest chunk, at about 35 percent to 40 percent, followed by electronics and appliances.

Forty-seven states have laws governing how rent-to-own businesses operate, including Ohio, which enacted its law in 1988, May said. The laws require stores to "tell the customer how much money they're going to end up paying," he said.

Sutton's business has grown to about 70 franchises in 21 states. At first, Sutton focused exclusively on shiny wheels and so-called performance tires. In 2010, as tire prices soared, he expanded to include passenger tires.

"We started looking at the number of people buying used tires, and it was amazing," he said. "When you look at that model, you find a lot of people buying used tires because no one's willing to give them credit."

Sutton saw an opportunity to expand, offering the no-credit-check promise to people who needed everyday passenger tires but would prefer to pay extra for the luxury of a new set that includes free roadside assistance during the lease.

He declined to say how many tires have been repossessed at various franchises, but Sutton estimated that almost 80 percent of tire customers end up owning the ones they rented.

Tire experts say that soaring oil prices have translated into higher rubber costs, making decent tires financially out of reach for some customers. The days of walking into a tire store with $350 and getting a high-quality set installed on your Chrysler are gone.

Marvin Bozarth of Shelbyville, Ky.-based Bozarth Tire Industry Consultants said that not only does the rubber in tires cost more nowadays, but the bigger-wheel trend means that trucks that once boasted 16-inch wheels now sport 18-20 inches straight from the factory. "That takes more tire," he said.

There isn't much data on average pricing, but Sutton said that Rent-N-Roll typically enters into 18-month contracts with customers. The sooner the customer pays off the balance, the less he'll pay overall. All transactions have a 120-day same-as-cash period, so customers able to scrape together the purchase price within three months pay no interest.

Between those 120 days and the contract's 18 months, customers can pay off the tire balance at any time and have 50 percent of the remaining contract price shaved off. Customers who keep with the 18-month plan ultimately will end up paying twice as much than they would have within 120 days, Sutton said.

Williams, at Policy Matters, said the rent-to-own model might work for some families with shaky credit and immediate tire needs. But she urged people to fully read the fine print of the contract and consider how much cheaper it would ultimately be to buy the tires outright than to rent them. Most important, she said that consumers should make sure they can afford the weekly payments to avoid repossession.

May, of the national rent-to-own association, agreed. "This is an unknown product, and the more people see it, the more popular it gets," he said. "By all means, do your research. These are your tires that get you to work."