What do You Need to Consider When Offering Consumer Financing?
Are you considering offering consumer financing? It’s a hot topic these days because more and more business owners are beginning to see the perks that come with following through with this decision. However, there are some questions you need to ask yourself before jumping on board.
First, will it cost you anything? Some firms will charge you a flat monthly rate for their consumer financing solution, but there is probably going to be an initial setup fee to get you going. Others will charge a percentage on what is being bought. So, you sell an item for $1,000 and $75 of it goes immediately to your financier. Your customer pays the full $1,000 plus interest, and you get $925.
Some financiers will not charge you for their services, but these are rare. They make their money through the interest the customer pays and you get full price for your goods and services.
You also need to ask yourself if your target audience will qualify for financing. Many financiers will only do business with people who are prime or prime-plus borrowers. Their credit reports have to be nearly flawless. However, there are others out there that will work with prime and near-prime borrowers, and these are the firms you need to look for because when you partner with them, you cast a wider net when it comes to your potential customers.
The cost of the financing can be challenging for your customers and it could lead to some consequences if they fail to read the fine print and end up regretting their decision later. Consumers like to buy something now and make low monthly payments later, but you have to make sure the annual percentage rates aren’t unreasonable. Some will go as high as 29 percent, and that’s not good for your clients.
Flexibility is important to customers as well. For instance, rather than having to re-apply every time they do business with you, they should have a line of credit at your business, which allows them to come in and shop whenever they want and not have to worry about going through the application process again and again.
While consumer financing is a great way to bring in more customers and boost your profits, it has to fit your clientele. Find the right company through extensive research and partner with the financier that will bring value to your business and improve you customer satisfaction.
At The HELPcard, we’ve had years of experience working with clients from a variety of industries. We know that every client deserves a customized approach, and that’s how we’ll work with you and your customers. Our rates are reasonable, our application process is quick and easy, and we work with prime and near-prime borrowers. Contact us today and find out more about our consumer financing solutions.