“Tires are a necessity,” said Jim Hawkins, a University of Houston law professor who studies the alternative finance industry. “These customers are vulnerable because they have no choice.”
The first rent-to-own tire and wheel dealers appeared in the mid-1990s, targeting young urban males looking to spiff up their rides. Chains enlisted rap personalities such as Snoop Dogg and Busta Rhymes to hawk shiny customized rims and low-profile tires.
But after the economy crashed, dealers saw an influx of customers asking for standard passenger tires. Many new patrons were older and a surprising number were women, a group the industry had all but ignored.
Eric Malone, who owns eight RimTyme stores in North Carolina, Virginia and Georgia, was drawn to the business by the high profit potential. RimTyme averages more than $1.4 million a year in sales across its 25 locations, nearly double the take at parent company Rent-a-Center’s furniture and electronics stores.
But customers who can’t afford to buy tires sometimes can’t afford to make rental payments either.
Malone’s employees make about three repossessions a week. Malone said some new customers seek bankruptcy protection soon after getting new tires, hoping to shed payments and dodge the repo man. But they quickly learn that because they signed rental contracts, not loans, those can’t be modified or discharged in court.
Don and Florence Cherry, the North Carolina couple who rented their tires from Rent-N-Roll last fall, filed for Chapter 13 bankruptcy protection after making just three payments on their tires.
A representative of Rent-N-Roll argued successfully in court that this was one debt that couldn’t be negotiated: They could either “return the tires or pay them out.”
They kept the tires.
“When you’re working paycheck to paycheck, your options are limited,” Florence Cherry said. “These tires were a lifesaver at any price.”