There was a time when consumer financing options were reserved for automobile dealers and big box retailers. Now, small businesses, online retailers, B2B operations, medical practices, and more are using consumer financing to drive sales and grow their client base.
What Is Consumer Financing?
Most consumers are used to making purchases and paying in full for goods and services. If a specific item is too expensive, they will most likely pass on a purchase or settle for something else that falls within their budget. Consumer financing options spread out the overall cost of the purchase over manageable installments. This allows people to purchase exactly what they want without having to settle for the next best thing or putting a strain on their own finances. When a business offers consumer financing options, it provides customers with flexibility to purchase what they want, which improves a business’ bottom line.
How Does Consumer Financing Work?
Consumer financing is easy to set up at your business and once implemented getting customers into the program is quick and painless. When a customer wants to take advantage of consumer financing, they provide the necessary information to you and a phone call is placed to the finance provider. This can be handled while the customer waits or while they shop. The provider will perform a quick credit check to determine the amount of financing the customer has available, what the installments will be, as well as the interest. Once the customer has completed their purchase, their total will be broken down into easy monthly installments.
Building Brand Loyalty
Consumer financing can be used in conjunction with marketing to create a strategy to build brand loyalty and grow your customer base. Consumer financing has built-in promotional tools, such as “First six months same as cash” and others which, when combined with sales events, allow your business to get more people into the consumer financing program, increase sales, and boost cash flow. Additionally, a business that offers flexible payment options to their customers builds a loyal customer base who are more likely to tell their friends and family about the advantages of making purchases over other businesses that make customers pay in full at the time of checkout.
What Businesses Use Consumer Financing?
Consumer financing is used by a wide range of industries. Almost any business, onlinee or off, that accepts credit cards as payment for purchases can offer consumer financing options. Brick and mortar, as well as online retailers offer financing options to boost sales by spreading out the cost to their customers over manageable installments. Medical practices, hospitals, dentists, and similar offices offer consumer financing to ensure payments, because patients tend to prioritize medical bills lower than other living expenses when they have to pay the full sum at once. Financing options help to offset medical expenses for patients. Distributors and suppliers for almost every industry offers financing options to their clients, as well, so businesses can purchase items and materials for their operations without incurring a major expense all at once.