Monthly payment plans, installment financing, and Buy Now, Pay Later (BNPL) platforms are no longer reserved for luxury items. Businesses across sectors are shifting to offer affordable payment plans, and Millennials and Gen Z are driving that change.
Younger customers prefer monthly payments for a number of reasons. Businesses can attract and retain these consumers by offering the payment options that they’re looking for.
The Rise of Monthly Payment Plans
As recently as a few years ago, installment plans were the exception, often reserved for big-ticket items like a new HVAC, swing set, an engagement ring, or other high-cost purchases. Fast forward to 2025, and BNPL options are standard. The rate of consumers choosing payment plans is surging, with the global industry expected to grow at a compound annual growth rate of 26.1 percent from 2023 to 2030.
Why the significant uptick in consumer financing adoption? The reasons vary, but one factor can’t be ignored: the rise of payment plan preference among younger shoppers. Millennials and Gen Z consumers are driving the demand for monthly payment plans across all sectors, from major home projects to everyday retail purchases, and includes services such as funerals, medical and professional services, such as tax debt or timeshare relief. We explore more about these demographics’ buying preferences below.
Why Millennials and Gen Z Prefer Monthly Payments
No matter the product or service, younger shoppers expect to make their large purchases with monthly payments. The “why” is different for each consumer, and understanding their motivations for choosing consumer financing is essential to providing the platforms and programs that meet their needs and convert them from shoppers to happy, loyal customers.
Here are some of the top reasons why Millennials and Gen Z prefer monthly payments over cash or credit cards:
Budget-Conscious Spending
Many young consumers are budget-conscious. Whether to avoid debt or because their budgets are tight, shoppers under 45 are often more mindful of their spending habits than their older counterparts. Affordable monthly payment plans empower cautious spenders with low, predictable payments that help spread out costs –– and in many cases, without the astronomically high interest rates associated with revolving credit. Recent research found that 65 percent of Gen Z and Millennials have used an installment plan in the past year as they seek to better manage their budgets.
Instant Gratification with Manageable Risk
Monthly payment plans allow shoppers to access high-ticket items, including furniture, aesthetic procedures, appliances, etc., immediately, without draining their savings or charging the purchase to a high-interest credit card.
In many cases –– such as for dental emergencies, a broken hot water heater, or other urgent needs –– the purchase can’t wait. Affordable installment plans allow shoppers to enjoy the convenience of getting what they want and need now without the unexpected financial strain of a big-ticket expense.
Digital-First Expectations
Gen Z and Millennials are accustomed to digital experiences, and they expect the same with BNPL options. Offering mobile-first consumer financing helps businesses deliver frictionless checkouts that allow for payment flexibility both online and in-store. When shoppers know they can easily apply for affordable financing from their phone or a company tablet, and they’ll receive a credit decision in just minutes, they’re more likely to take advantage of low monthly payment plans and commit to their purchase on the spot.
Important numbers: 65 percent of Gen Z and Millennial shoppers take advantage of monthly payment plans
Monthly Payments: Not Just for Luxury Purchases
Consumers use installment plans for a wide range of services: medical procedures, tattoos (and tattoo removal), home improvement and repairs, pet boarding and training, and the list goes on. Younger consumers expect every major purchase to have a monthly payment option. Below are some recent stats on the most popular purchases for installment plan usage:
- Clothing and fashion: 42%
- Electronics and gadgets: 32%
- Furniture and home décor: 26%
- Home appliances: 22%
- Groceries and everyday household items: 19%
- Personal travel: 18%
- Tools and home improvement items: 17%
- Experiences and events: 14%
- Exercise equipment: 11%
What This Means for Your Businesses
Younger shoppers make up a huge segment of the consumer population with significant purchasing power. Earning their trust –– and dollars –– requires businesses to meet them where they are with payment plans that fit their wants and needs. That means partnering with the right consumer financing company. United Consumer Financial Services brings decades of industry-specific financing expertise to our clients, making financing simple and straightforward for your business and your customers.
Engaging young shoppers with low monthly payment plans allows brands and businesses to serve more customers, sell more products and services, and increase long-term revenue.
Increased Sales and Conversion Rates
Offering low, affordable monthly payment plans removes price barriers that keep budget-conscious shoppers from moving forward with their purchases. According to Harvard Business Review, BNPL adoption led to immediate and significant increases in spending: consumers approved for installment payments were more likely to follow through with purchase, with the likelihood of making a purchase increasing from 17 percent to 26 percent. When those shoppers completed their purchases, their basket sizes were 10 percent larger on average than they were before the introduction of consumer financing options.
Building Loyalty that Leads to Sales
Businesses that offer payment flexibility stand out to Gen Z and Millennial buyers. Offering flexible, affordable payment options builds trust, helping to attract new customers while simultaneously improving retention rates.
Staying Competitive in Every Market
No matter what you sell, offering consumer financing gives you a competitive advantage. High price tags are one of the primary barriers preventing young shoppers from considering your products or services. By providing an affordable alternative, you clear the path to purchase and position your business as the ideal choice for shoppers with specific payment wants and needs. In addition, same-as-cash options help your business attract consumers and beat the competition.
Convenience and Cost-Savings
When you partner with United Consumer Financial Services, you not only serve the consumer, but you also set up your business for success. UCFS provides
- Thorough, one-on-one sales training
- Marketing materials to engage shoppers
- Unmatched U.S.-based customer service
- Payment collection from your consumer for the life of the loan
- Prompt funding to your business, usually within 1 to 2 days.
UCFS handles your consumer financing program so you don’t have to allocate time, energy, and finances to run things in-house. Our professional team brings decades of experience to ensure you maximize your program to reach your target audience.
To recap:
- Consumers are at least 7 percent more likely to complete their purchase when consumer financing is available.
- Those consumers spend 10 percent more than they would without affordable payment plans.
Conclusion
Monthly payments aren’t a trend. They’re not the future. They’re the present reality of sales. Any business that wants to stay competitive and attract the Gen Z and Millennial customer segments must embrace payment flexibility now. United Consumer Financial Services, a leading provider of installment financing, empowers businesses to help shoppers make purchases. Becoming a merchant and increasing your sales is easy. Contact UCFS today to learn more about how simple –– and lucrative –– offering consumer financing can be. Let us partner with you to increase your customer base, reach younger shoppers, and grow your business starting now.
