There was a time when consumer financing programs were solely reserved for mortgages, auto dealers, and big box retailers. Now a wide variety of small businesses, online retailers, B2B operations, medical practices, and more are using consumer financing to drive sales and grow their client base.
What Are Consumer Financing Programs?
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 more budget-friendly.
That reality has changed in recent years with the popularity of consumer financing, which spreads out the overall cost of a purchase into manageable installments.
The purchase of a car is a great example of this. Financing a vehicle allows buyers to purchase the exact car they want instead of settling for the next best thing or putting an added strain on their finances. Dealerships that offer consumer financing options provide customers with the flexibility to make their top-choice purchase, which keeps customers happy and improves the dealership’s bottom line.
How Does Consumer Financing Work?
Consumer financing is quick and easy for businesses to implement and customers to use. When a customer wants to take advantage of consumer financing, they simply fill out an application (in-person or online) that your organization can then pass on to the lender for evaluation. The provider will perform a quick credit check to determine the amount of financing the customer has available, what the installments will be, and the interest rate. Once the customer has completed their purchase, their total will be broken down into even monthly installments.
What Businesses Use Consumer Financing?
Consumer financing is used by a wide range of industries. Almost any business that accepts credit cards as payment for purchases can offer consumer financing options.
Consumer Financing Programs for Auto Dealerships
Auto dealerships are a prime example of businesses that benefit greatly from offering consumer financing programs. By partnering with banks and credit unions, dealerships can offer tailored financing solutions that make purchasing a vehicle more accessible. Instead of requiring full payment upfront, these consumer financing programs allow customers to spread the cost of a vehicle over monthly payments, significantly reducing the financial strain of large purchases.
Financial institutions play a crucial role in enabling these programs, quickly evaluating customer creditworthiness and providing loan terms that best suit the buyer’s needs. This partnership between auto dealerships and financial institutions not only boosts vehicle sales but also enhances customer satisfaction by offering a smoother, more affordable buying experience.
Consumer Financing Programs for Small Businesses
Beyond auto dealerships, many other types of small businesses can also leverage consumer financing programs to benefit their customers. Brick-and-mortar and e-commerce retailers, for instance, offer financing for items such as furniture, electronics, and jewelry, allowing customers to purchase high-ticket items with manageable payments.
Other categories of businesses that utilize consumer financing for their customers include medical practices, hospitals, dentists, and similar offices. These consumer financing programs ensure patients can stay on track with their payments because medical bills tend to be prioritized below other living expenses.
Distributors and suppliers for almost every industry offer 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.
Building Brand Loyalty
One of the biggest benefits of consumer financing is the brand loyalty it creates for your organization. Consumer financing programs can be used with marketing to create a brand loyalty strategy that will grow your customer base. Consumer financing is a convenient and accessible way for first-time buyers to take opportunities that would otherwise be unavailable to them, so using promotional language such as “Buy now, pay later” to help them understand the terms of the program is a great advantage.
Combining consumer financing programs with sales events allows your business to expand its financing program, increase sales, and boost cash flow.
Additionally, a business that offers flexible payment options to its customers builds a loyal customer base. Establishing your company as an accessible option for all types of buyers at any stage of life will increase family and friend referrals and keep your company in good rapport with existing customers.
At Web Finance Direct, we offer easy and flexible financing options for dealerships and their customers. To learn more about our consumer finance program, contact Web Finance Direct today.
FAQs
What is consumer financing?
Consumer financing is a form of lending that allows customers to purchase a product and then pay for it in installments, rather than immediately paying in full.
How can more consumer financing options grow my client base?
Adding financing options for your small business will expand the pool of customers who will be able to do business with you, therefore increasing word-of-mouth referrals and establishing customer loyalty.
How can more financing options increase sales?
The more financing options you provide for potential customers, the more opportunity you are giving them to say yes to their desired purchase. Consumer financing programs open up endless possibilities for buyers and your sales!
How does consumer financing work for auto dealerships?
Buyers at dealerships apply for financing through consumer financing programs. That application is forwarded to a lender, who then provides financing options for the customer.