Appliance and electronics-loan company, Radio Rentals, will begin trialling a new business decision to loan money to cash-strapped customers with poor credit ratings.
Loans of between $1,000 and $3,000 will be offered on a trial basis to customers in Tasmania initially, with the view to expand the business around Australia.
Customers must pay-back the loan over a period of 12 to 36 months, and RR Australia – the company which trades as Radio Rentals – said its interest rates will be competitive.
“Annualised interest costs [will be] pitched below statutory capped rates and that of competitors,” said RR Australia managing director, John Hughes.
“The company’s ability to utilise current infrastructure and systems provides it with a competitive advantage.”
The short-term loans will target customers who need urgent finances for medical or insurance needs, and will be offered from January next year.
The new business will be leveraged on Radio Rentals’ current business systems and structures, meaning minimal expenditure for the company.
Radio Rentals, whose business lies in renting consumer electronics and appliances including flat-screen TVs, fridges and furniture to approximately 80,000 Australians wants to expand and offer its customers a wider range of services.
Hughes told SmartHouse News that the company’s customers inspired its decision to offer cash loans.
“Over the years we’ve built up a strong relationship with customers. They come to us and rent products for a couple of years, and then purchase those products,” he said.
According to Hughes, in previous times the relationship between the customer and the Radio Rentals store could end there, however now the company has come up with a solution to keep its members.
“Customers often asked us to print out their account history, and they’d use that as leverage to go down the road and borrow cash [from another dealer]. There are many financiers out there who value this sort of account information,” he said.
Now, Radio Rentals plans to offer its customers the complete package.
“We’re not going out there with a new marketing campaign, we’re just offering this opportunity to customers we’ve had a strong relationship with,” said Hughes.
“Some people might be negative to begin with, but when they’re fully informed I think they’ll applaud the offer. They’ll find it is extremely competitive compared with the rest of the industry.”