Tire rentals keep drivers moving

Los Angeles TimesJune 14, 2013 

BIZ AUTO-TIRE-RENTAL 1 LA

Customer Alonso Reyes, 25, of Reseda, left, gets a written price quote for a set of four new rims for his 2008 Mustang GT from salesman Chris Sanchez at Rent-a-Wheel in Canoga Park, California, November 9, 2012. Rent-a-Wheel is a national chain that sells tires and rims on a rent-to-own basis.

MEL MELCON — MCT

When the tires on their Dodge Caravan had worn so thin that the steel belts were showing through, Don and Florence Cherry couldn’t afford to buy a new set.

So they decided to rent instead.

The Rich Square couple last September agreed to pay Rent-N-Roll $54.60 a month for 18 months in exchange for four basic Hankook tires. Over the life of the deal, that works out to $982, almost triple what the radials would have cost at Walmart.

“I know you have to pay a lot more this way,” said Florence Cherry, 57, a nurse who drives the 15-year-old van when her husband, a Vietnam veteran, isn’t using it to get to his job as a prison guard. “But we didn’t really have a choice.”

Socked by soaring tire prices and short on funds, growing numbers of Americans are renting the rubber to keep their cars rolling.

Rent-to-own tire shops are among the newest arrivals to a sprawling alternative financial sector focused on the nation’s economic underclass. Like payday lenders, pawn shops and buy-here-pay-here used-car lots, tire rental businesses provide ready credit to consumers who can’t get a loan anywhere else. But that access doesn’t come cheap.

Customers pay huge premiums for their tires, sometimes four times above retail. Those who miss payments may find their cars on cinder blocks, stripped of their tires by dealers who aggressively repossess. Tire rental contracts are so ironclad that even a bankruptcy filing can’t make them go away.

Still, with payments as low as $14 a week, rent-to-own – long the province of sofa sets and flat-screen TVs – is proving irresistible for consumers desperate for safe transportation.

It’s also a booming business for specialized tire and wheel dealers that have become beneficiaries of a struggling U.S. economy. Fast-expanding chains with names like Rent-a-Wheel and EZ Rims 4 Rent that got their start selling high-end rims to car enthusiasts have discovered a lucrative market selling tires on time.

“We see tremendous opportunity serving people who are just looking for dependable tires to get to work,” said Larry Sutton, founder and president of Rent-N-Roll. The Tampa, Fla., chain has 66 locations nationwide, including two in California, and plans to open six more this year.

Sutton registered the trademark RNR Tire Express last fall and has been rebranding many stores to focus on tires instead of the oversize chrome rims that were the chain’s mainstay. Today, Sutton said, tires make up two-thirds of RNR’s sales, up from less than half several years ago.

Plentiful customers

A host of economic factors are pushing the growth of tire rentals.

Soaring costs for natural rubber and petroleum used to manufacture tires have pushed up prices. The average price of a passenger tire in the United States increased 57 percent in 2012 from 2006, according to data from trade publication Modern Tire Dealer. The prices on some popular sizes have more than doubled.

Consumers, meanwhile, have an increasingly difficult time affording big-ticket purchases.

Since 2009, median household income has fallen more than 5 percent. And in the wake of the recession, the number of households in the country with credit histories too damaged to qualify for most credit cards has risen to 35 percent from 27 percent five years ago.

With more people shut out of traditional financing, the rent-to-own industry has flourished. Promising no credit checks, small down payments and the option to return merchandise at any time with no questions asked, chains such as Rent-a-Center are raking in huge profits from a customer base that’s swelled to 4.8 million people, up 67 percent since 2007, according to the Association of Progressive Rental Organizations.

‘Tires are a necessity’

Tires account for just a tiny slice of the $8.5 billion rent-to-own market. But they stand out from the industry’s traditional fare because – unlike with a dinette set – giving back tires means not being able to drive to work.

“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.

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service