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Fixed Term Consumer Financing vs Credit Card

Credit cards can provide convenience and make it easy to purchase almost anything they want or need. But repayment can be brutal if cash isn’t available to pay off the full balance within a month.

Whether adding a pet to a family, upgrading a house with a new fence or landscape lighting, buying a new mattress or furniture, paying for tax or timeshare relief, covering the cost of medical equipment – such as a CPAP machine – or a medical procedure not covered by insurance, or installing a new HVAC system or home backup generator in an emergency – cash or credit card is not always readily available.

These purchases – and others like them – aren’t the equivalent of swiping a credit card for a $40 purchase. No, these consumer purchases are much more substantial and, oftentimes, seen as investments.

Mention Low Monthly Payments to Every Customer

  • What payment methods do you currently offer?
  • Do your customers or patients want your products or services but don’t have enough readily available cash?
  • What payment methods do you currently offer?
  • Do your customers or patients want your products or services but don’t have enough readily available cash?
  • What payment methods do you currently offer?
  • Do your customers or patients want your products or services but don’t have enough readily available cash?

Factors to Understand Customers’ Payment Options

When selling products between $1,000 and $10,000, it’s important to understand your customer’s budget. These four factors can help you be educated to discuss payment option pros and cons with your customers.

1. Approval for the full amount

Which payment method helps you approve more customers or patients for the full dollar amount?

  • Consumer financing: Fixed-term financing helps more customers or patients cover the cost for the full amount of their purchase.
  • Revolving credit: Credit cards have limits and many consumers are already carrying a balance from month to month. That means they may not have enough open credit on their credit cards to make their purchase in full. In addition, many consumers need that open balance for their day-to-day living expenses.

2. Customers avoid credit card debt when using financing

Which payment method helps your customers save money?

  • Consumer financing: Financing works like an auto loan – customers obtain their purchase right away and pay over time.
  • With financing, customers make equal installment payments for a set number of months.
  • With UCFS, customers can pay off their contract early with no fees and save on interest
  • With UCFS, customers have a fixed interest rate. Some other finance companies change the interest rate based on a consumer’s credit quality.
  • The finance charge is set when payments are made promptly.
  • Revolving credit: If a customer doesn’t have the cash to pay off their credit card purchase the next month, interest charges – on interest charges – on interest charges – can be brutal.

3. Repayment Success

Which payment method gives customers and patients the best opportunity to repay successfully and avoid credit card debt?

  • Not every payment method gives customers and patients the best opportunity to repay successfully.
  • Fixed-term financing gives customers and patients the best opportunity to repay their purchases in full. With a low, fixed amount per month that aligns with their monthly budget and set end date, customers and patients can completely pay off the owed amount. Think: $96 for three years to purchase a needed mobility scooter or CPAP or Portable Oxygen Concentrator.
  • Additionally, with UCFS, the APR is set no matter what a consumer’s credit quality. Some finance companies increase the APR for lower-credit quality consumers. If a same-as-cash promotion is not met, interest kicks ins.
  • As compared to consumer financing with three years of $149 monthly payments and costing the consumer $2,050 less than on a revolving credit card.

4. Approve more customers

Which payment method helps your business help more customers and patients?

What factors does a finance company use to evaluate credit to approve a credit application? FICO score? For sure. But down to what level of FICO? And does the finance company look at other factors?

UCFS approves more consumers for credit because of the many credit attributes used to evaluate a consumer’s credit, including if a down payment is being made, if auto-pay will be used, and if a co-buyer is on the application.

Aligning your business, products, and services with a consumer financing solution can be the difference in serving more consumers – and gaining more business and revenue.

The Right Payment Option Helps Grow Your Customer Base

Are your payment options helping as many customers as possible and helping you grow your top and bottom line? Are you leading with low monthly payments each time you talk to a customer?

When you partner with UCFS, a leading provider of fixed-term consumer financing, you can help customers secure the products and services they want now through an option that is favorable to them and your business.