Near-Prime Consumer Spending Increasing
Whether it is the lingering effects of the recession or the challenges of high debt that many Americans struggle with, a recent study shows that 56 percent are near-prime consumers (also called sub-prime consumers). The report from the Corporation for Enterprise Development (CFED) said the result of being near prime is that consumers are locked out of many traditional financing options. For those who do find financing, it’s often at much higher interest rates than what consumers with strong credit pay.
A CFED official said their report shows that millions of Americans are being excluded from the perks that Americans in the financial mainstream are seeing and get trapped in a cycle of debt. These are people with credit scores at 700 or lower.
The economy is improving and employment rates are up. However, as the report indicates, repairing credit takes a long time, especially after incurring late charges, which often come with penalties including higher interest rates.
For businesses looking to expand financing options for their clients, even those who are near-prime consumers, there is a way to reach them and it’s through a lender offering non-traditional solutions. Despite the wariness of consumers to make the same mistakes they did before and during the recession, they are accustomed to seeing financing options with just about every purchase they make. Your business can offer the same.
Retail, home improvement, funeral, medical and training industries are all seeing their customers becoming more loyal as a result of giving them financing options, and this includes near-prime consumers who are often left out of the mix where financing is concerned. More loyalty means more returned business, which equates to higher profits. Some call this the cycle of profit because loyal customers are also strong proponents of the brands they love, which turns into word-of-mouth advertising. This is free and one of the greatest influencers among consumers.
When it comes to pulling in more business, building a culture of quality around the customer experience is a huge component. Marketers are proponents of financing options because it gives them another tool to work with to pull in more customers. Financing options can be the difference between a consumer making a purchase or walking away. For instance, home improvement contractors often have projects that are just out of reach of the consumer’s budget. If the financing component is in place, the consumer has a reason to go ahead with the project.
The HELPcard is a financing company that gives consumers, even near-prime consumers, a revolving line of credit that they can use to make purchases in a variety of industries. We have examined the many levels of consumer credit and we’ve devised programs that suit the need of your business and your clients. Get more information by contacting us today.