While buying something when the customer decides to pay the amount in small installments through time and not all at once this system is known as consumer financing. Consumer financing is also availed by the customers by paying the amount for the particular product using store credits or points.
Consumer financing can be offered by the company to the customers directly or by aiding a third party into the deal. There are several companies out there who’s only business is providing this financing to the customers.
Consumer financing is a must for your business because having this option available for the customer can make your company more popular and most availed by customers ending in cultivating a good amount of profit for the business.
There are various proofs that with this option businesses have improved in many different manners. Customers getting these facilities are bound to come back to your company whenever they are in need of similar products . Customer loyalty is something which increases very rapidly as you give your customer an option to consumer financing. Not only this, it will visibly reduce your merchant’s credit and fraud risks to a great extent.
To get the best option among the many available ones for consumer financing for your business there are certain areas where you need to focus your attention and consider them while coming with it.
Here, I will try my best to address those areas and help you know how exactly one should do the choice while selecting a consumer financing company.
- Before you go into selecting the first thing you need to understand is whether Consumer financing is appropriate for your business or not.
It mainly helps you to get customers. When the people get the option to pay the product’s price in several small installments there are more chances for them to buy the product in comparison to a situation opposite to it.
So, it mainly increases the number of sales for your company and assures customer loyalty.
- When a customer selects consumer financing in order to do the payment while checking out they get the facility more or less in an instant. This prompt service generates a positive idea about the whole business to the customers. The company mainly checks the credit scores and the way the customer wants to repay the amount before allowing them with this facility.
Now, the main factor you need to focus on is whether this whole deal will actually benefit your customer or not. Because if at the end the deal does bad to the customer the name of your company will be at stake for it. This should be one of the main concerns as a business holder because at the end businesses run 50% on goodwill.
- There are few requirements as well which you need to meet while you get yourself a consumer financing company.
- There are companies who have certain requirements for the customers to avail the offer like they have to be a prime member or they have to buy a membership with a certain amount of money and so on.
- There are companies who will demand money from you before they provide the customers with the promised facilities. That amount of money should be thought of in a good light before you actually invest it.
- At what cost do your customers get the consumer financing. There are companies which provide the facility at a rate of 5% and then there are companies whose rates are as high as 30%. The lesser the rate the more your customers will be attracted to it. The best companies are the ones that have a rate as low as 0%.
The retailers who have a third company dealing with the consumer financing gets the payment of the product at upfront. They have less worry in comparison to the companies who manage the whole thing on their own. They need to manage the whole thing on their own and also they only get the down payment amount at first.
Clearly from a overviewd perspective the option of having a third company do the job for you is the better option and for that you need to consider the points above written in order to select the best option.
Author Bio:
Allison Janney is a Sales & Marketing Manager at ChargeAfter. She would like to share content on Finance Industry like Point of Sales financing, Buy now Pay later, consumer financing & Ecommerce financing for valuable reader.
