Rent-to-own (RTO) contracts can be a source of significant revenue for your music store.
RTO agreements offer a flexible solution for customers looking to own an instrument over time while making manageable payments — but how do you implement this in your music store?
In this blog, we’ll break down the process into easy steps to make sure you can create an RTO contract that works for you and your customers.
Let’s get started.
RTO contracts can be tricky to set up — but it’s a lot easier when you use an all-in-one point of sale (POS) solution.
Here’s how to do it.
When a customer is ready to set up an RTO contract at your music store, begin by entering the customer’s information into your POS system.. This step is important because it links the transaction with the correct individual or entity, ensuring all contract details are associated properly.
After you input the customer’s information, click on the action items in the top right corner and select “rent to own.” Then, click the plus sign next to “rent to own” to start the contract.
If this is a school rental, apply teacher, student, school, or school district. You can attach this information to help you better search for or sort rentals later.
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Next, input your stock keeping unit (SKU) or search by product title. For example, you can enter an SKU such as 300381, or a product title like Conn trombone. This allows you to locate the exact instrument the customer is interested in.
Enter the serial number or add it later. If you have the serial number, you can input it to pull in the instrument’s details. If not, you can choose to enter this information later. Remember: The serial number ensures you’re dealing with the correct item — especially for high-value products.
Choose between “rent to own” or “rent only.” This distinction affects the ownership terms and the customer’s payment obligations. After picking the contract type, set up the payment frequency (e.g. monthly), the term (duration of the contract), and the minimum number of payments.
For example, you might choose a 10-month contract for a student who’s renting a trumpet for the school year at $75 per month. You can also specify any financing options and rental credits. If you need to, you can adjust the monthly payment or interest at any time.
Related Read: Start a Profitable Instrument Rental Program With Ben Borkowski
Add any monthly maintenance or protection costs. You can use this option to add monthly maintenance fees that can cover some repair and damage. Terms of this coverage must be explained in your contract.
Select the appropriate tax profile, like your main physical location or another store in a neighboring city that has a different tax percentage. Choose the amount of the payment due today and the next payment amount. Decide if you want to use autopay and charge late fees. If you charge late fees, enter the amount.
Once all details are entered, upload a signed document and print out the contract for both the store’s records and the customer’s reference. Afterward, save the contract and put it in a safe place. You may choose to save your contracts digitally, but it’s important to create a process for data storage.
Your data storage policy needs to require that RTO contracts are stored digitally in a secure system, with access limited to authorized personnel. Regular backups need to be maintained, and contracts have to be retained for a predetermined set period.
A good schedule typically includes full backups weekly or monthly, and incremental backups daily or hourly, with offsite storage and regular testing for data recovery. Encryption and organized filing further protect your data, and the policy should comply with all applicable laws.
With the contract in place, accept payment through cash, card, or other available options. This secures the transaction and confirms the rental agreement.
Music Shop 360 (our all-in-one POS solution) simplifies the payment process by supporting various payment methods, including mobile and contactless options like Apple Pay and Google Pay. It gives your customer a convenient way to pay, too.
After completion, you can manage the RTO contract under the modules and “rent to own” section. Our “rent to own” interface allows you to exchange or return the instrument, email the contract to the customer, make payments, or purchase the RTO contract outright.
Related Read: How To Use Music Store POS Software: 7 Beginner Tips
Following these steps ensures a smooth and clear process for setting up an RTO contract, benefiting both your business and the customer by establishing transparent terms and expectations.
To simplify your rent-to-own processes and improve your music store’s workflow, Music Shop 360 is an invaluable tool. This comprehensive platform offers a suite of features tailored to meet the unique needs of music retailers.
Key features of Music Shop 360 include:
When you choose Music Shop 360, you can transform the way you manage your music store, which makes it easier to focus on what truly matters — providing excellent service to your customers.
Don’t miss the opportunity to elevate your business. Schedule a demo today with Music Shop 360.