Renting Tires? Really?

The economy is so bad there's a thriving business in tire rental.

High prices are driving more motorists to rent tires

The economy is so bad there’s a thriving business in tire rental.

LA Times (“High prices are driving more motorists to rent tires“):

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, N.C., 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 Wal-Mart.

“I know you have to pay a lot more this way,” said Florence Cherry, a 57-year-old 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.”

Now, I realize that there has long been a huge market in rent-to-own stuff, targeted at poor people who either won’t or can’t defer gratification. Such businesses are giant scams but fill a niche.

But tire rental simply makes no sense, especially at the prices mentioned in the article. The Cherrys needed new tires for their Dodge Caravan, couldn’t afford to buy them, so rented them for $54.60 a month.

A simple search at Tire Rack, where I’ve bought my last couple sets of tires, shows that Sumitomo Touring LS T 215/65R16 tires are the cheapest that fit a 2007 Dodge Caravan SE (I don’t know what model the have, so took a stab at it; the Caravan hasn’t been produced since the 2007 model year. They go for $71 apiece, or $284 for a set of four.  Let’s call it $350 with installation. Now, that’s more than $54.60. But they’d have it paid off in six months rather than eighteen at that rate.

Don’t the Cherrys have a credit card? Even with the exorbitant interest rates charged on a credit card, they’d come out way, way ahead.

And, for that matter, why not just buy used tires if you’re that strapped for cash.

FILED UNDER: General
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. legion says:

    Seriously – if you can afford $54 a month, put that $54 into a jar for a few months – it’s not like the fact that your tires are are down to the steel is something that happens all of a sudden…

  2. Sam Malone says:

    I’m a huge fan of Troy Aikman…but it turns my stomach to see him endorsing rent-to-own stores.
    Terrible scams..predatory even.

    1
  3. Don’t the Cherrys have a credit card? Even with the exorbitant interest rates charged on a credit card, they’d come out way, way ahead.

    Not everyone can get unsecured credit. I think this is a case of your privilege showing.

  4. DC Loser says:

    This is yet another business preying on the poor. Many people only look at the monthly payment vs. the out the door price, and figure they can afford $54 a month (even though it’s for 18 months), but can’t stomach $400 out the door that’s good for about 4 years. It’s really sad.

  5. EddieInCA says:

    Mr. Joyner –

    Again, as I posted in a previous thread…. you speak from a place of a privileged guy, with an education and means to figure these things out.

    No. Many poor people don’t have a credit card.

    Yes. $55 per month is a lot, but a whole lot less than $350.

    Yes. There are people – who work full time – who struggle to make ends meet due to the cost of living, and $100 is a HUGE amount.

    When you phrase your post with such incredulity, you show how out of touch you are with the average working class stiff. Two people working minimum wage jobs full time (40 hours per week) are lucky to bring home $2000 per month total (not each). Given that a decent one bedroom apartment almost anywhere in Los Angeles will run $1000 per month, and DWP (water and electric) will run probably $125, Gas for the home will run $25, phone will run $50, Groceries $500, Car insurance will be $100, Auto Gas will be $200. Oh, crap, they’re out of money…

    And THAT’S assuming….

    …. they can find a 1 bedroom apartment for $1000
    …. they have no kids.
    …. they never get sick or injured.
    …. their car never breaks down or needs service.

    We have the lowest tax rates in several generations right now, corporate profits are close to all time highs, the stock market is through the roof, yet too many people can barely scrape by.

    Shame on all of us.

  6. JKB says:

    @DC Loser: It’s really sad.

    It’s fine Progressive education.

    You’d think this would be a sign the wheels are coming off the bus, but it is not. It’s really sad.

  7. anjin-san says:

    @ EddieInCA

    Hey, money is flowing up to the 1% at an ever increasing rate, and the market for 200K+ cars is booming.

    All is well…

  8. JKB says:

    @EddieInCA:

    You give an excellent example of why people who only make minimum wage should not live or work in LA. They should, while the car is still running, move to someplace where a decent life is possible. There are so many leaving, that they could reverse “wagon train” it to have the security of numbers and the ability to help out those who have misfortune along the way.

    But you miss the point, they are now down $55/month for 18 months. They could have saved that $55/month for 6 months and then gone back to their regular expenditures. Or they could keep saving the $55 for future needs. And if your tires are down to the steel belts showing, you’ve had more than 6 months to know you needed new tires.

    So yes, being poor sucks. Been there done that. I did have the fortune of being raised by a grandmother who stretch a dollar and though started out in starvation made it to a point where she owned her own home, even though she and her husband never really made more than what would be considered minimum wage today.

  9. EddieInCA says:

    @JKB:

    But you miss the point, they are now down $55/month for 18 months. They could have saved that $55/month for 6 months and then gone back to their regular expenditures.

    No. It was you who missed the point.

    THEY DON’T HAVE THE $55 TO SAVE. What would you cut out of the examples I gave? Gas? Water? Groceries? Insurance?

    And it’s damn easy to say “They should move somewhere else.”. Here’s another idea. How about we go back to an age where two people working hard honest jobs could afford THE BASIC NECESSITIES of life. I gave you a real life example of what it costs to live. Let’s say they moved to Shreveport, or Tulsa. Do you think it’s any better there for poor people. At least in Los Angeles, there are some jobs. The last six years, I’ve worked in Atlanta, Ft. Lauderdale, Shreveport, Baton Rogue, Pittsburgh, and Detroit. It’s not better in any of those places. They’re much better off in Los Angeles – high housing prices and all.

  10. PJ says:

    Let them eat cake.

  11. anjin-san says:

    I did have the fortune of being raised by a grandmother who stretch a dollar and though started out in starvation made it to a point where she owned her own home

    I guess she never got around to telling you that the world changes over time.

    My grandfather came from a place where poverty was literally a killer. Left there, came to America. Worked hard, never made a lot of money, but he owned his house, had no debt, and left this world with money in the bank.

    He was also able to send his kids to one of the best universities in the world, because we had affordable public education back then. So I grew up in surrounded by comfort and opportunity, not attending funerals for my siblings like he did.

    But, the world has changed.

  12. OzarkHillbilly says:

    @JKB:

    You give an excellent example of why people who only make minimum wage should not live or work in LA. They should, while the car is still running, move to someplace where a decent life is possible.

    But then who would wash the cars of the rich? Cut their grass? Clean their houses? Take care of their alzheimered parents? Watch little Johnny and Janey at the day care? Wait on their tables? Wash their dishes? Bus their tables? Take their money at the local convenience store?

    Or here’s an idea… We could just pay these working stiffs a decent wage. Naaaaahhhhhhhh……

    A$$holes like you would have to pay 5 cents more for a cup of coffee and we can’t have that.

  13. Franklin says:

    God help them if anything even slightly serious goes wrong with their 15-year-old van.

  14. EddieInCA says:

    @Franklin:

    God help them if anything even slightly serious goes wrong with their 15-year-old van.

    No problem. They can just save $100 per month for 150 months and buy a nice used $15,000 mini-van.

    See. Problem solved!

    If only they weren’t such lazy, shiftless, losers, they wouldn’t be in such a position.

    /sarcasm

  15. Gustopher says:

    Mr. Joyner, you obviously have no clue what it means to be living paycheck to paycheck, which at your likely income level makes perfect sense (there would be something very wrong if you weren’t putting something aside for emergencies).

    But way too many people in this country don’t have that — and $55 monthly is more doable than $350-400 now if you don’t have that money now. It’s not that the poor people are too stupid to know the difference, it’s just that they often have no alternatives. They know they are being screwed.

    It’s really quite expensive being poor. Having a bit of extra money frees you up from having to deal with a lot of this crap, and means that not only do you have more money, but that it goes farther.

  16. @legion: That’s exactly what I said when I read this article.

  17. JKB says:

    @EddieInCA: No. It was you who missed the point.

    They are spending $55/month now to “rent” tires. Whatever they did to get that $55/month to spend on tires for 18 months, they could have done for 6 months then bought tires. After, either they could return that $55 to their disposable income or continue to save it for other expenses.

    You say they don’t have $55 to spare. Well, then they don’t have it to spend on tire rental either.

    As for moving, well, either you continue on or you change something. Or I guess it is not about the nail

  18. Mikey says:

    @Gustopher:

    It’s really quite expensive being poor. Having a bit of extra money frees you up from having to deal with a lot of this crap, and means that not only do you have more money, but that it goes farther.

    As Terry Pratchett wrote in Men at Arms: “A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”

  19. rudderpedals says:

    I’ve met quite a few people who have “their” rent to own place and adore it because the staff treats them with respect. You could talk about how bad a deal it is until you’re blue in the face.

    Even worse, what sometimes happens is a desperate head of household under the gun gets a $2K title loan on his $10K SUV – with an effective 39% APR once the force placed unavoidable insurance is factored in – and loses the car a few months in.

  20. Franklin says:

    Think what middle-class or especially the rich are doing with $55 per month. For example, I’m saving more than that, eventually investing it in mutual funds. Over the years, that’s worth at least 5 or 10% interest. That’s *me* getting the interest.

    In the meantime, renting-to-own means that this working class family are effectively borrowing the true cost of the tires at an exorbitant interest rate. I’m not even sure if I’m calculating this right … it’s something like a 130%. That’s *them* paying out interest.

    This is why we need progressive taxes.

  21. J-Dub says:

    They need to find themselves a good payday lender!

  22. Tony W says:

    This is an old article on the topic. It is a bit of a long read (and irritatingly paginated), but very interesting.

  23. @legion: Kind of hard to put money in a jar if your car needs to be inspected and it won’t pass because you need new tires on it.

    Oh, me and my family would love to know where you can a single tire for $71. The prices for tires have skyrocketed in the last couple years due to asinine tariffs put in place on imported Chinese tires.

  24. Matt says:

    There have been tire rental places in Texas for longer then I’ve lived here (+4 years). I didn’t realize this was some sort of new thing that people hadn’t noticed yet..

  25. Matt says:

    @EddieInCA: Yup very true. I’m personally putting 10 bucks aside each month in the hopes to have the money to get a new set of tires before my current ones give way. I can’t save more then 10 bucks because I’m your stereotypical starving college student trying to make it through my bachelor’s. I personally work two jobs. One of my jobs is at the school in IT and the other is at a fast food place. Snap down here is really finicky if you don’t have a kid. Seems they’d rather reward the careless people who have kids they cannot afford then the college students who are making the proper decisions but are struggling against their background of being poor.

    As it stands right now I’ve had at least one flat tire a year due to the terrible road conditions here. So I could see why people would choose to rent so that they wouldn’t be held responsible for the tire repairs/replacement. I don’t do it because I don’t like renting anything more then I have to. I also do my own automotive/computer/everything work.

  26. anjin-san says:

    @ James

    The economy is so bad there’s a thriving business in tire rental.

    Perhaps you could go into more detail about the horrible economy. In the reality I inhabit, the economy is doing reasonably well, the result of a long run of steady improvement under Obama. A lot of the effects of the Bush crash have been erased. Of course I realize this is OTB, where the real estate recovery never happened, and we are more or less limited to “Latest job report pretty darned good, but everything still sucks” posts from Doug.

  27. EddieInCA says:

    The economy is so bad for the working poor that there’s a thriving business in tire rental.

    Fixed that for you.

  28. legion says:

    @Timothy Watson: True, if something sudden comes up, you may be boned. But that’s true in most any circumstances when you’re living paycheck-to-paycheck (or less). But just generally “tires wearing through” isn’t something that happens suddenly…

  29. EddieInCA says:

    @legion:

    But just generally “tires wearing through” isn’t something that happens suddenly…

    You’re still missing the point, and have obviously never been in these situation (and good for you for that), but the reality is that “tires wearing through” happens suddenly when you’re too busy worrying about food, bills, and rent to worry about “tires”. So by the time you notice “tires wearing through” it’s too damn late. And, if you’re worried about food, bills, and rent, tires aren’t something that’s a priority.

    By your example, the working poor should also be saving for their refrigerator wearing out, or their water heater stopping working.

  30. Mikey says:

    More on why it’s expensive to be poor. Includes a link to the Pratchett quote I put up earlier.

  31. @Mikey:

    The cheapest grocery stores are the ones who can use economies of scale and market power to push down prices (think of Wal-Mart). These are located in the suburbs where there is the most space and cheapest land.

    No, they’re located in the suburbs because everytime someone tries to build one in an urban area, anti-corporate activists petition the municipal government to deny them a permit.

  32. Rafer Janders says:

    Don’t the Cherrys have a credit card?

    Probably not. About 30% of American households don’t have a credit card. It’s called being poor.

  33. Rafer Janders says:

    James, writing posts like these really does you no favors. You just reveal yourself as hopelessly out of touch with what life is like — and how desperate it really is — for tens of millions of hard-working Americans.

    Seriously, try to get out a bit more in the real world. You might learn something.

  34. Rafer Janders says:

    @anjin-san:

    Perhaps you could go into more detail about the horrible economy. In the reality I inhabit, the economy is doing reasonably well, the result of a long run of steady improvement under Obama. A lot of the effects of the Bush crash have been erased.

    The asset-based economy such as the stock market is doing reasonably well. The daily economy for most Americans, however, that is, the economy that depends on them having secure, well-paying jobs with benefits and that have the hope of a stable retirement, is still pretty terrible. I can go into great great detail about this if you wish.

  35. Matt says:

    @anjin-san: The economy is going quite well for those who are well off. For the rest of us the economy still sucks but it is definitely better then it was in 10.

  36. john personna says:

    I’m late to this thread, but I agree that this is less about the state of the economy, and more about the decline of the working class(es). Personal economic planning can help, but when wages decline across the whole group, and costs rise (esp. rent), the fundamentals are against you.

  37. anjin-san says:

    @ Rafer Janders

    well-paying jobs with benefits and that have the hope of a stable retirement, is still pretty terrible

    Do you expect that to improve? I see it more as a systemic change as a result of moving into the post-post ww2 era. What policy choices are available to us to mitigate this?

    Whenever I hear a Republican talking about “the terrible economy”, I see an agenda at work, and not an honest one. Obama has played the horrible hand he was dealt reasonably well.

    As for the many problems that have been created by the changing nature of our economy and society as a whole, that’s a conversation that is well worth having. I spend a bit of time around folks that are working poor, or just flat out poor every day, as does my wife, so we have at least a glimpse of their reality.

  38. Tyrell says:

    Why are tires so high? It seems like they have gone up quite a lot in the last few years. Why are salaries not going up or in some cases going down? Everyone that I know tell me that they have not seen a raise in four or five years.

  39. Tony W says:

    @john personna:

    this is less about the state of the economy, and more about the decline of the working class(es).

    Indeed, however the good times are going to be over too soon for the wealthy if we do not boost the working class – at least a little.

    That class is the major consumer of goods and services in the United States, as well as the main source of labor. They also form the largest potential voting block. At some point a financial reward system so heavily skewed toward CxOs and stockholders will become insufficient to sustain the bubble any longer.

    Few corporations want to “go first” in terms of paying a living wage and re-building a sustainable system – but kudos to Costco and a few others who have managed to serve all stakeholders in more equitable fashion than many other companies.

  40. @Tyrell:

    Why are tires so high? It seems like they have gone up quite a lot in the last few years.

    Punitive tariffs on cheap tires imported from China allowed the remaining producers to push up their prices without fear of being undercut.

  41. Rafer Janders says:

    @anjin-san:

    Whenever I hear a Republican talking about “the terrible economy”, I see an agenda at work, and not an honest one. Obama has played the horrible hand he was dealt reasonably well.

    I often see the same agenda at work when Republicans complain, and I’m well aware of the fact that the policies they endorse would actually make the economy much worse for most Americans. But let’s not kid ourselves that we have a great economy. I’m doing well, because I have a large stock portfolio, but I’m an anomaly. For most working Americans, their wages have gone down the last 30 years, their pensions have disappeared, their benefits have been cut, their jobs have gotten less secure, and overall life has become far more unstable.

    We simply do not have a great economy at the moment. Sure, things are better than in the dark days of 2008-2009, but that’s a pretty damn low hurdle to clear.

    I see it more as a systemic change as a result of moving into the post-post ww2 era. What policy choices are available to us to mitigate this?

    It’s partly a systemic change, but it’s also in large part due to very conscious choices we’ve made to advantage the rich at the expense of everyone else.

  42. Rafer Janders says:

    But tire rental simply makes no sense, especially at the prices mentioned in the article.

    Newsflash: desperate person does desperate thing! More details at 11.

  43. Rafer Janders says:

    @anjin-san:

    I spend a bit of time around folks that are working poor, or just flat out poor every day, as does my wife, so we have at least a glimpse of their reality.

    It’s not just the poor. Even among the middle and upper-middle class, most everyone in this country is one job loss, car crash, cancer scare or lawsuit away from complete financial destitution. That is not the sign of a healthy economy.

  44. anjin-san says:

    @ Rafer Janders

    I agree, we are better off than we were in 2008, but certainly nowhere near where we would like to be. The economic improvement I am referring to is a relative thing.

    I keep thinking back to a column Robert Reich wrote in 2009 – he said he could not find a road that took us back to where we used to be.

    I was talking to the CFO of one of the largest heavy construction companies in CA the other day, he said they have had to expand operations to other states – all the prime real estate in CA has long since been developed, and building out places like Tracy and Lodi did not work out so well.

    That’s one of the things we are running up against. The “more, faster, bigger, bulldoze, build, buy” model we came up on is hitting a lot of its natural limits.

  45. OzarkHillbilly says:

    So bitching about it feels good. What are we going to do about it to change things? My guess is nothing.

  46. James Joyner says:

    @Stormy Dragon: I was able to get credit cards as a college student making $350 a month. So, yes, I’ve always had a credit card.

    s@EddieInCA: While my parents came from poor backgrounds, my dad moved us to the lower middle class and I moved from there to the middle class and ultimately to the lower part of the upper middle class. I’ve certainly been at points in my life when needing new tires was a strain. I’ve never been at a point where it would have occurred to me to rent to own anything. I’d have just gotten used tires or visited the local junk yard. And, yes, I did that for many years to find repair parts.

    @anjin-san: The post isn’t about Obama; it just mentions the economy. I have, pretty consistently over the decade I’ve been writing here and well beyond that, maintained that presidents have precious little to do with the state of the economy. This isn’t a partisan political post.

    @Timothy Watson: As noted in the post, I’m quoting that price from Tire Rack. Which, as noted in the post, is where I buy my tires. The local Firestone place will match the Tire Rack rate. Presumably, NTB, Goodyear and other national tire chains will do the same.

    I fully recognize that having to suddenly spend $500 or so on tires is a big deal for a lot of people. I make a decent living and even I hate top make that expenditure, given all it does it put me back even. I’m just saying that paying $50 a month for cheap tires is a strange choice.

  47. Just 'nutha' ig'rant cracker says:

    @James Joyner: You really don’t get it. Go back to the ‘burbs.

  48. steve says:

    It’s really quite expensive being poor

    I had to forfeit a $1000 car I owned because I couldn’t afford to get the windshield fixed and so the tow truck company confiscated it.

    I have a STEM degree and work at Home Depot. There simply aren’t the opportunities to move up that my parents’ generation had. Due to a few small things really–cheap shipping across the pacific, less government redistribution creating a middle class, the shrinkage of unions, and the withering, over decades, of the buying power of minimum wage.

    We’re headed towards another gilded age where america once again resembles a 3rd world country. At some point, if the votes don’t work, the pitchforks will. I’ll name my pitchfork Tagg.

  49. Tyrell says:

    @anjin-san: I notice that people just get overjoyed when gas prices drop a few cents, like to $3.47 a gallon, never mind that it was $2 a gallon just a few years ago. People should be pitching a fit instead of being manipulated by the big oil companies, brainwashed by the news media, and being spied by the government.

  50. Rick Almeida says:

    @Just ‘nutha’ ig’rant cracker:

    Maybe James’ critics could try a little harder to explain why his perspective is so outrageous. The couple in question is a 2-income family, a nurse and a corrections officer. Those seem like pretty reasonable jobs.

    It is not outrageous to ask why 2 married and employed adults don’t see better options. There is likely more to this than meets the eye.

  51. @James Joyner:

    I was able to get credit cards as a college student making $350 a month.

    “as a college student” already puts you above 70% of the people in this country in terms of earning potential. So again, it’s at lot easier for someone like you to give you money with no collateral just because you promise to pay them back later.

  52. @Rick Almeida:

    The question isn’t whether the couple in question should have better option. It was asking “Don’t they have credit cards!?” like he assumes that just because he’s always had an easy time getting credit means that absolutely everyone has just as easy a time.

  53. Grewgills says:

    I did a quick check and in LA you can get used tires for a caravan with 75% tread for less than $200. Seems like a terrible call to rent when that option is there. I bought a lot of used tires when in college in the 90’s. Of course, I bought the rusted out Toyota pick up I was driving for $350 so there was no way I was going to spend to put new tires on it.

  54. Just 'nutha' ig'rant cracker says:

    @Rick Almeida: I can’t speak for where you live, but where I am from corrections officers make minimum wage unless they work in a county where there is still a union keeping wages up. Sorry. And as for the wife, “nurse” covers a lot of territory, not all of it high wage hospital RN work.

  55. Rick Almeida says:

    @Just ‘nutha’ ig’rant cracker:

    In CA, corrections officers form at least part of the largest and most powerful union in the state. A quick google reveals that corrections officers earn $3050 / month after training and top out at $6144 / month.

    I agree that all nursing jobs are not created equally, but I still do not think this is the whole story.

  56. john personna says:

    @OzarkHillbilly:

    So bitching about it feels good. What are we going to do about it to change things? My guess is nothing.

    Perhaps nothing, because I think the roots of the problem lie off the political radar.

    Consider this as a starting point: How the Average American Family Spends Their Income

    The big categories, adding them up, are Housing (with utilities) and Transportation (buying cars, fixing cars, fueling cars).

    Can we do anything to improve the plight of renters?

    Can we do anything to improve public transportation?

    Because, if not, the poor will continue to fight a system intended for home buyers with good cars.

  57. Mikey says:

    @Rick Almeida: Well, if you read the full story, you find the Cherrys filed for Chapter 13 bankruptcy (structured debt repayment) not long after renting the tires. So it would appear the issue wasn’t poverty, it was debt.

    Starting salary for a corrections officer in NC is around $28K, not great money but nearly double minimum wage.

  58. bentobox says:

    I’m a long-time lurker at this site, because I like to see a variety of viewpoints, but for some reason this post really bothers me on a fundamental level.

    It is expensive to be poor–demonstratively so, as others have pointed out. Being poor means that you are paying a percentage just to cash your paycheck, for example. Having a little bit of cushion that allows you to save or plan ahead makes all the difference in the world, but it’s not something many poor people (at least poor people who didn’t fall from higher circumstances) have much experience with. I encourage you to read this Cracked article (yes, that Cracked! Apparently they are branching out?) on poor people’s short-term mindset, written by someone with actual experience in the area:

    http://www.cracked.com/blog/the-5-stupidest-habits-you-develop-growing-up-poor/

    It’s pretty easy to boggle at poor people’s decision-making skills when you’ve never had to live that way. How about using a little imagination, or research? There’s a growing literature in this area (which is definitely in academic journals, not just on Cracked) about the decision-making tradeoffs that poor people make and why. The fact that this is another growing industry right now is not a good sign for our economy.

  59. pfaffman says:

    @EddieInCA:
    Seven months earlier they knew that they would need tires. If they had saved $50/month then they would have $350. That beats paying $50/month for 18 months by a large margin. A credit card card is not the solution. Seeing that you have $1000 in the bank is. If they have $50/month to pay for rental tires then they had $50/month to be prepared for the situation.