Consumer financing programs are also known as “customer financing” or “retail financing” programs. They allow merchants to offer customers an affordable monthly plan to finance transactions, with loan approvals that require just a few minutes at the point of sale.
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Thanks to consumer financing, merchants instantly provide a way for their customers to finance their purchase, enabling them to apply for a 6- to 24-month installment loan within minutes at checkout. Merchants are charged a fee upfront and/or a monthly service fee for this type of financing.
What Are the Benefits Offered by Consumer Financing?
Consumer financing programs come with a number of benefits, such as:
- Keeping Risks under Control – If the customer is behind on payments or isn’t completing his/her payments at all, the merchant must assume the loss of revenue. In the case of consumer financing, the risks fall on the organization that provides financing for customers.
- Increased Sales and Customer Base – Thanks to consumer financing, merchants can attract more customers to the business using promotional financing offers. Also, the program is appealing to those customers who don’t have excellent credit scores.
- Makes Business More Competitive – Consumer financing helps your business become more competitive. The competitors in the field may not be offering the same financial options to customers.
Consumer financing is a great way of not only retaining your current customers but also attracting new ones who are in need of your goods and services with a more flexible way to pay. However, when applying for a consumer financing program, you should consider the cost to your business, taking into account both fees charged by the financing provider and the setup cost of implementing the financing program.