hhgregg Finance: A Look at Options and History

While the hhgregg retail chain unfortunately declared bankruptcy and closed its doors in 2017, its financing options, specifically how they operated, remain a relevant topic for understanding retail financing strategies. During its operational years, hhgregg offered various financing programs to help customers purchase appliances, electronics, and furniture.

Previous Financing Options at hhgregg

Primarily, hhgregg partnered with third-party financing companies. These partnerships allowed customers to apply for and receive credit specifically for purchases at hhgregg stores. The main benefit was that it made larger purchases more accessible to customers who might not have been able to pay upfront. Some common types of financing offered included:

• Store Credit Cards: hhgregg offered branded credit cards, often through a major financial institution. These cards typically came with promotional financing options like deferred interest plans. These plans allowed customers to make purchases and pay them off within a specific timeframe (e.g., 6 months, 12 months) without accruing interest. However, it was crucial to pay off the entire balance within the promotional period, as retroactive interest charges could apply if the balance wasn’t cleared.
• Installment Loans: Customers could also apply for installment loans through hhgregg’s financing partners. These loans involved fixed monthly payments over a set period (e.g., 24 months, 36 months). Interest rates on these loans varied based on creditworthiness.
• Lease-to-Own Programs: These programs were often targeted towards customers with lower credit scores. Instead of financing a purchase directly, customers would lease the product with the option to own it after making a certain number of payments. Lease-to-own programs generally involved higher overall costs compared to traditional financing.

Considerations and Risks

Like all financing options, hhgregg’s offerings came with certain considerations and potential risks:

• Interest Rates and Fees: The interest rates on store credit cards and installment loans could be higher than those offered by traditional credit cards or loans, especially for individuals with less-than-perfect credit. Late payment fees and other charges could also add to the overall cost.
• Deferred Interest Traps: Deferred interest plans required careful management. Missing a payment or failing to pay off the balance within the promotional period could result in the accumulation of significant retroactive interest charges.
• Impact on Credit Score: Applying for and using financing options, including store credit cards, could impact a customer’s credit score. Responsible use, such as making timely payments, could improve credit, while late payments or high credit utilization could lower it.
• Lease-to-Own Costs: Lease-to-own programs were typically the most expensive option, as the total cost of ownership could be significantly higher than the retail price of the product.

Learning from hhgregg’s Experience

hhgregg’s bankruptcy highlights the challenges faced by retailers, especially those relying heavily on financing. While offering financing options can attract customers and boost sales, it also carries risks related to credit quality, economic downturns, and competition. The legacy of hhgregg serves as a reminder for both retailers and consumers to approach financing with caution and careful planning.