Sears launches new lease-to-own program
NEW YORK (AP) — For those financially strapped shoppers who can't wait for layaway, Sears has another option.
Sears Holdings Corp. is launching a program at its namesake department stores that will allow shoppers unable to qualify for credit to lease such big purchases as electronics, home appliances, furniture and mattresses.
The program, which was tested last September in 10 stores, is being rolled out to all 900 stores starting this week. Sears is launching the program with leasing service WhyNotLeaseIt.
The new service comes as the Hoffman Estates, Ill.-based retailer, which also operates Kmart, is trying to turn itself around after years of weak sales. It also underscores how Sears is looking for more ways to cater to its middle-income shoppers, who are still struggling despite an improving economy.
In the depths of the recession, Sears began offering layaway to customers. Kmart has offered the interest-free pay-over-time program since the 1960s. But the department store chain saw that shoppers, who didn't have access to a full line of financial services, couldn't wait several months for an emergency product like a refrigerator that was put on layaway.
"Over the last three to four years, it has become difficult for our customers to have access to credit and to get new credit," said Jai Holtz, vice president of financial services at Sears Holding in an interview with The Associated Press. "The program gives a much-needed financial solution to those unable to purchase on credit, secure credit, or because of immediate need, can't use layaway."
Holtz said that the customer reaction to the test last fall in the three markets — New York, Texas and Florida — was strong.
Candidates won't be subjected to a credit check, but to qualify, they must be 18 years old, earn a minimum of $1,000 a month and have a Social Security or tax identification number when applying. Customers make the first lease payment at the stores, followed by monthly or bi-weekly payments made electronically. The merchandise has to cost at least $280, and how much customers can lease will depend on income.
The program is meant for customers who eventually want to own the merchandise. After five months of making the payments, shoppers will have the opportunity of paying off the balance and owning the product. If they're not ready to make that decision at that time, they can continue to make the payments until 18 months after they sign up for the program.
Holtz said that the company is considered expanding the lease-to-own program at its Kmart stores.
Sears says it's the first national retailer that is offering a leasing program on a wide range of products. WhyNotLeaseIt, which is based in Manchester, N.H., lists such partners on its website as Jennifer Convertibles, Discount Mattress and Ashley Furniture.