Rental Applications

Agreements Sub-Categories

• Rental Applications
• Reviewing the Agreement with the customer

Our objective in this evolution will be to understand who our customer is and to review standards for collecting personal information.

Purpose

"The purpose of the rental application is to gather enough information to insure collection of rent or merchandise in a timely manner"

The purpose of the rental application is often misunderstood. If all customers made all payments on time, rental applications would be unnecessary. A rental application is used for 3 main purposes.

• Initial approval
• Collections
• Marketing

Initial Approval
Know your target customer. People Rent to Own for two reasons. 

• They don't wish to buy at retail
• They are unable to buy at retail

People who don't wish to buy at retail are typically temporary residents. Corporate clients who are in town for a short period. 

People who are unable to buy at retail make up more than 95% of your customers. The reasons they can't buy at retail are usually one, or all, the following

• Bad Credit
• Bad Checks
• Retail Charge offs
• Repossessions
• Loan defaults
• No Credit (in reality, few people are denied credit at the retail level for no credit history...most people begin receiving credit card apps in the mail on their 16th birthday)

Your job...your reason for existing...is to write agreements and collect rent from customers who have proven their inability/unwillingness to pay on time.

Keep this in mind when reviewing applications. If you disapprove all customers for bad checks, you will be out of business in 6 months. On the other hand, approving everyone with a "pulse and a payment" can be foolish as well.

The truth lies somewhere in between. But be aware that your target customer is much closer to the "Pulse and Payment", than the "Good Credit" end of the scale. 

Very few potential customers will be turned down. Typically, 98% or more of all applications are approved. The remaining 2% are disapproved due to a remaining balance from a previous agreement, or because the individual has "skipped" from another Rent to Own.

Collections
Getting messages to the customer through personal references (friends and relatives) with the goal of collecting rent and retaining the agreement. 

Use caution when contacting personal references about a late payment. Only contact these people if repeated attempts to contact the customer directly are ignored. When speaking to any third party about a customers late payment, avoid specifics. Your intention is not to embarrass your customer or give out private information. It is usually enough to leave a message to call. 
For example:

• "Hello
  My name is Rufus Mudsucker with XYZ Rent to Own, your friend, Jane Doe, listed you as a personal reference. We have been trying to reach Mrs. Doe, can you get a message to her?
  
  Great!...Please tell her to contact XYZ Rent to Own by Wednesday about her account. It's important that we speak to her soon.
  
  Thank you for your help".

In this example, we get the message across in a friendly way without mentioning any specific and personal information.

Another example of the same call with a slightly stronger message.

• "Hello
  My name is Rufus Mudsucker with XYZ Rent to Own, your friend, Jane Doe, listed you as a personal reference. We have been trying to reach Mrs. Doe, can you get a message to her?
  
  Great!...Please tell her to contact XYZ Rent to Own to arrange a pickup of our merchandise. It's important that we speak to her soon."
  
  Thank you for your help.

By mentioning pickup of our merchandise, you have increased the urgency without giving out personal information.

Marketing
Sending flyers and other marketing materials to a customers personal references can be a very effective way of gaining BOR.

Any communication with a personal reference should include the name of the customer who listed them. The flyer or coupon will carry more weight if the reference sees a friends name printed prominently on the mailer.

Basic Information
Rental applications vary in complexity and thoroughness. But their are guidelines for the minimum amount of personal information to collect from a potential customer. 

As stated earlier, the rental applications main purpose is to aid in collections. Therefore, the more detailed the information, the more likely you will maintain contact with your customer.

We have developed a sample "Personal Information Sheet". Please click HERE to view a printer friendly version.

Personal References
"A person, with a phone, that the customer sees on a regular basis"
Personal references are the heart of the application. Without personal references, a rental application is 'scrap paper'. You should require at least 3 personal references (3 is the minimum...5 is better). 

When a past due customer is avoiding contact, a close relative is the next best thing. At least 2 personal references should be relatives. 

Summary
Your goal when processing an application should be to gain enough information for approval. Very few potential customers will be turned down. Typically, 98% of all applications are approved. The remaining 2% are disapproved due to a remaining balance from a previous agreement, or because the individual has "skipped" from another Rent to Own.

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