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Getting credit established or recovering from a financial crisis

If you are recovering from financial crisis, or if you have never had credit and need to get established, you need to learn about the types of lenders who are available to those with no credit and “low” credit. One of the lender profiles is “lease to own.” If you choose wisely, this can be one of the first big steps towards a strong, healthy credit profile.


In the past, lease to own has had a sketchy history. Yes, there have been a few, relatively unknown companies that were legitimate. However, the vast majority of old school lease to own should have been known as lease to pay forever and never own your purchase! The shady companies would set up consumers with leases that were very expensive when compared with credit card interest rates. When we say very expensive, we mean hair on fire, smack your head with a can of beans expensive.

Customers who used the old school, awful lease to own usually did so because there was no other choice. They accepted the bad terms for two reasons:

  1. The consumer really needed the product(s) they leased
  2. They figured the terms were bad, but it would help build their credit

The sales pitches were pretty good at distracting the consumer from the real situation. And reality was cold and cruel. When using the bad version of lease to own, the consumer stilled owed a large, lump sum payment to take ownership of their goods. Either that, or the consumer could continue to lease the product month to month. Or, the consumer could return the product.

To make the point, let’s say you bought a $500 piece of furniture. You might have had a 12-month lease. During that time, you might pay the equivalent of $700 dollars in lease payments. You would think that is bad enough. But, it gets worse. After you make all of the payments, you did not own the product you leased. You had a balloon payment due if you wanted to keep your coffee table. So, you pay for the table, plus a hefty lease expense, then you might owed another $200 to keep the table.

If you are thinking this is insane, crooked, crazy, and illegitimate, you are right 100%. Most of the scammy lease to own companies died quickly. They would rush in, make as much as they could as fast as they could, then go out of business or end up being sued by government agencies.


The owners of Zibby recognized there was a vastly under-served market. Many millions of people cannot get credit for one reason or another. Many of them need it for important purchases. The same folks need a way to get started or restarted in building a credit profile.

Zibby created a legitimate lease to own program. Yes, of course, the borrower pays the equivalent of a higher interest rate than someone with ten years of great credit history and a 788 credit score. That’s the way the finance markets work. Low risk borrowers pay a lower interest rate than higher risk borrowers. Fair is fair.

The lease to own program Zibby created is fair when you consider the risk of lending to their customer base. It charges more, but the charges are reasonable. Just as important, Zibby discloses everything. Their borrowers know exactly how much they will pay before the lease (loan) is completed. Finally, Zibby does not surprise the customer with balloon payments at the end of the lease. When you make all of your payments, you own the item you purchased. Here are the Zibby FAQ.

That’s the way it should be! Recognize a need, assess the risk, and offer a reasonable product/service at a cost the consumer understands from the beginning. Another word for it is transparency.


Want to know more about Zibby? Here’s the short version–

The corporate founder of Zibby, COGNICAL, describes the company as a “fully-integrated lease-to-own payment option for online shopping.” In their press release dated Nov 19, 2014, Cognical identified their motivation for creating Zibby:

“The nonprime consumer is a data problem, not a creditworthiness problem, and they are underserved in an online shopping environment built for the prime consumer with credit cards or cash in the bank,” said Brandon Wright, Cognical’s co-founder and Chief Executive. “46% of the US population has a FICO score below 700 and 34% of consumers between 18 and 49 years old don’t have a credit card.” announced today it has raised more than $10M in equity and debt financing to help e-retailers grow sales to nonprime and underbanked consumers.

In this description you find the foundation of the Zibby philosophy for handling nonprime and underbanked consumers. It’s all in the data. If you can learn enough about your applicant, and if you can learn it quickly, it is possible to underwrite with a sufficiently close tolerance for nonprime loan applications. That is precisely what Zibby does.

Zibby was founded by two computer scientists, David R. Cheriton and Ashutosh Saxena. Cheriton is a billionaire who has founded numerous successful companies over a distinguished career in science and business. Saxena is a prodigy who emerged as a young prodigy and has continued to amaze followers in both scientific and business circles. In other words, the company has strong, respectable roots. Further, it is well funded. In February, the New York Business Journal reported that Zibby completed a deal for one hundred and fifty million in financing.

The need was large. The solution is well conceived. The leadership is experienced. There is plenty of funding. Zibby should be around to serve consumer lending needs for a long time to come.