Think Finance’s Presta Lease Purchase Option Now Available Through Electronic Express

Credit service company Think Finance is extending its Presta lease-purchase payment solution to online retailers, Kathy Boden Holland, Think Finance executive vice president-corporate development, told Consumer Electronics Daily. Presta launched in fall 2011 (CED Oct 21/11 p1) with its online lease-purchase model for credit-challenged consumers, giving them a way to buy items -- largely consumer electronics -- by ordering products online for immediate delivery and making fixed payments over a year. The company announced its first electronics retail partner, Electronic Express, this week and plans to add several others over the next few months, Holland said.

Customers can find better prices at Electronic Express than at Presta’s e-commerce site due to the e-tailer’s volume purchasing advantage, Holland said. Depending on the retailer, competitive prices are expected to be roughly 5-10 percent lower on retail partners’ sites when using the Presta payment option, she said. We found very little product overlap for comparison between the smattering of CE products on Presta’s site and the voluminous stock at Electronicexpress.com. A 16-GB iPad with Retina display at Electronic Express listed for $599 with in-store purchase only and no Presta buy option, while a customer buying the fourth iPad through presta.com would pay $23 per week, or $1,237, over the course of a year. A Samsung MXFS8000 audio system sold for $999 at Electronic Express Tuesday. The Presta price for the Samsung system at Electronic Express was $48 per week bringing the 52-week total to $2,496 after full term.

Electronic Express sees the Presta partnership as a way to reach the 5 percent of customers that don’t qualify for credit card payment or financing through GE Capital, Abe Yazdian, vice president of merchandising, told us. Through the program, Electronic Express can keep a customer who would otherwise go elsewhere to buy, he said. “A lot of our customers look at paying $12 a week as a lot easier than having to pay everything at once or pay a credit card at the end of the month,” he said.

Initial products available for purchase with the Presta payment option include the most popular selling items from $300-$1,500, he said. Items available for payment by Presta on Tuesday included a Toshiba 32-inch TV and laptop, Nikon camera and Sony tablet. “We didn’t want to overwhelm the customers at first,” Yazdian said, but the retailer plans to make the Presta payment option available to many more products in the future. Presta financing is available only to Electronic Express’s online customers now, but the companies are discussing expanding the option to walk-in customers, he said.

Revenue for Presta came in “a little under” $2 million in 2012, the first full year of operation, Holland said, and is expected to double this year. Consumer electronics are a particularly successful part of Presta, which also sells jewelry and housewares, she said. Popularity of CE items follows products that are trending at a given time, she said, citing “tremendous interest” in iPads and other Apple devices, laptop PCs and TVs. Presta allows consumers to get the product they want and have a standard payment plan over 12 months “with no hidden fees” or “unexpected events,” she said. If consumers want to trade up to another model to get “the latest and greatest” after six months, they can do that, she said.

Presta calls its monthly payments “rental fees,” which apply until the lease is over, when the product becomes the property of customers who have met their obligations. Customers who pay off a balance early receive a discount, according to FAQs. Half of customers pay early, Holland said, saying “it’s still early” in the life of the service and a large portion of customers are in their first lease cycle. Those who want to return an item can do so after the initial three-month term. Presta encourages ownership, Holland said. “We're not interested in recovery.”

Products bought at Presta are “brand new,” Holland said, so returned products are not re-sold through presta.com. The company works with third parties “to find new homes” for returned products, she said. Returned products “don’t appear on too many websites,” she said, but are typically refurbished and sold as used items through third-parties.

On how an improved macro economy has affected Think Finance business since the launch of Presta nearly two years ago, Holland said the market is growing for the customers the company targets. Think Finance “bridges the gap” between petty loans and prime credit card lending “and that gap has gotten bigger” in the past few years as banks have pulled back and fewer borrowing alternatives exist for customers “in the middle,” she said. “It’s not a credit product in a traditional sense, so it’s not going to be shown as debt on your credit report,” she said. The rental agreement consumers sign “really is a lease,” she said, which gives consumers “a lot of flexibility.” Presta is able to approve a large percentage of consumers who might be turned down for a credit card due to Think Finance’s history of underwriting a broad market, she said.

Under Presta’s terms, consumers can have only one lease at a given time. Now that one-year leases are coming due more frequently, “we're seeing customers who have paid off and acquired their first item come back and look for a second,” Holland said. Think Finance is looking for additional ways to fill the gap for consumers with limited purchase options, Holland said. It plans to roll out a new credit product before the end of the year, in addition to working with CE manufacturers who sell direct from their websites, she said.