209. Boost revenues of companies by rent-finance products (or rent-to-own products) - Financing on credit card
This idea is to boost the revenues of companies like Apple, Amazon etc 5x fold or more and boost profit margins.
The idea is to offer products for sale as a rent-finance or rent-to-own.
You buy the products as a finance, but you rent the payments with your credit card. There is also no credit score check so anyone can rent-finance products.
Like Apple offers a $1,000 iPhone. You rent-finance over 2 years, but you pay $2,000 (100% markup) as the risk is bigger for the rent-finance than a finance.
So you pay each month by credit card $80 per month for the $1,000 iPhone over 2 years, however, there is no credit score check as you rent-to-own the products, same as you rent-to-own a house.
The risk for Apple is the default cost or non-payment (like 10%), but:
1. As they pay back with a monthly charge on a credit card, this risk is reduced, you only need $80 on your credit card each month charged over 2 years.
2. If they stop paying the monthly cost, the products are returned to Apple and are refurbished as new.
3. As the monthly payments are small and can be charged on any credit card, it is only a $80 per month charge instead of a $1,000 charge.
4. Financing on credit card is possible, instead of charging the credit card the full amount, so this gives great buying power for the consumer.
5. Companies can tax-deduct fully the products as it is a rent-to-own contract.
6. There is no credit score check so anyone can rent-finance a $1,000 iPhone and make the smaller monthly payments.
7. A deposit of 20% could be charged upfront, (see below)
For Amazon, this could mean that they can offer rent-to-finance consumer electronics and other products which can be refurbished as new.
The profit margins for Apple and Amazon will double for these products!
Some remarks:
- The profit margin could be just 30% instead of 100%, as long as the default cost is covered and the refurbishment cost
- Tesla for example, could offer rent-to-own Tesla cars with 30% markup, however a 20% cost is incurred if you stop making the rent-to-own payments plus customers can charge their credit card to rent-to-own a Tesla car without credit check, like just proof of income.
Like a $30,000 Tesla car with 30% markup = $39,000 Tesla rent-to-own over 5 years, $700 per month rent-to-own when defaulted, $6,000 default cost is charged for example, or rather a 20% deposit is required. So no need for proof of income or credit check. The deposit reduces tthe monthly payments like from $700 to $600 per month or deposit is returned to customer after all payments are made, we still need to figure this out.
The financing cost could be 5% over 5 years so 25%.
- Amazon could simply offer financing on credit card of their products, whereby a $1,000 order over 2 years becomes $45 per month of charge on a credit card, this could 10-fold Amazon revenues! With or without a credit check.
