Consumer Financing Solutions Part 2: What You Need to Know About Offering Consumer Financing
This is the second post in our three-part series on consumer financing solutions. This article discusses four things you need to know about offering consumer financing and highlights the training and one-on-one support offered by UCFS.
If you missed part one – Common Reasons Why Businesses Offer Financing – be sure to take a look today. We review how consumer financing works, the benefits of offering financing to customers and things to consider when trying to determine if consumer financing is right for your business.
Have you decided that offering financing to your customers would be advantageous to your business and patient or customer base? Are you unsure of where to begin?
Rest easy, you’re in the right place.
Through your own research, you may have already discovered there are a multitude of customer financing programs out there. Each one fosters ins and outs that are crucial to understand, for some will better help you grow your sales and increase your business revenue.
Additionally, and something to always keep top-of-mind, some have your customers’ best interest in mind more than others.
Before we discuss what you need to know about offering consumer financing, it’s important to understand two of the most widely offered consumer financing methods:
Fixed-Term (Installment) Financing Methods vs. Revolving Credit Methods
- Fixed-term financing, or installment credit, allows customers to pay a low, fixed amount per month with a set end date. The APR can be set the same for all of a business’ customers based on the partnership agreement, as done by UCFS. Other finance companies frequently adjust the APR based on the consumer’s credit. The higher the consumer risk – the higher the APR. In addition, a same-as-cash promotion can be offered, but if a consumer payoff is not on time, interest kicks in.
- Revolving credit allows customers to pay a minimum monthly amount with no set end date. At first, this may seem like the preferred consumer financing method – to give your customers the lowest monthly payment – but, ultimately, this can take customers years (decades, even) to pay off and interest could double the original purchase price.
How to Offer Financing to Customers: 4 Must-Know Factors
Here’s what you need to know about offering consumer financing to your customers:
- By aligning your business with the right payment option, you can say yes to customers who previously could not afford your services and help customers with less-than-perfect or limited credit.
- With your goal of meeting customers’ needs and offering every customer a financing option that suits their budget, installment financing programs can approve customers with credit that is not optimum. This helps more customers secure financing.
- Through certain consumer financing programs, your customers can finance the total cost of your services.
- When you offer your customers a financing option that approves a higher dollar limit, it’s not only beneficial to customers, but also favorable for your business, as you can provide the total cost of services or products without the need for discounts.
- Merchant fees are largely unavoidable, regardless of which consumer financing payment option you choose for your business. However, there are certain customer financing programs that will allow you to keep more of your money.
- Try to align your business with a customer financing program that only requires merchants to pay a fee when financing a customer. Additionally, look for a program that has no minimum-usage fees, no monthly fees, no up-front or application fees, no recourse program and no requirement on how often a merchant must use the financing service.
- Not every consumer financing program will have your customer’s best interest in mind, but through specific routes, you can give your customers the best opportunity to repay.
- Keep in mind that with a low, fixed amount per month – with a set end date – your customers can completely pay off the cost of service(s) all while on a term that meets their monthly budget, with minimal impact to their daily financial commitment.
Take the Guess Work Out of Consumer Financing
As a leading provider of fixed-term installment consumer financing, we work hard to help our partners streamline and grow their business, approve more customers, and help consumers get the services, products or care they want and need.
At United Consumer Financial Services, we work with merchants of all types including distributors, medical providers, retailers, call centers, home improvement businesses and most other types of businesses to provide the best consumer financing services available today.
UCFS team members offer welcome material, one-on-one phone/web support and in-person meetings to educate our business partners on:
- How to offer consumer financing/low monthly payments
- How to overcome consumer objections
- Creating marketing material to promote low monthly payments.
We educate prospects during the sales cycle, offer invaluable tips and insights on how financing works, and work hard to help professionals create a plan specific for their business.
Also – through printed and downloadable materials, videos, monthly webinars, and helpful e-newsletters – we do the leg work for our partners so they can remain up-to-date on all things consumer financing.
Learn more about partnering with UCFS or get in touch with us directly today:
Stay tuned for our third and final post in our three-part series on consumer financing solutions where we will discuss how to overcome objections to financing a sale.