What Is Consumer Financing

What Is Consumer Financing?

Let's say you are a consumer interested in a product or service that comes with quite a hefty price tag which you cannot pay for upfront.

Well, this is where consumer financing comes in.

Consumer financing provides customers a financing option that allows them to make monthly payments over a specific period of time

By offering this option it helps customers cover the cost of the purchase.

Therefore, in return it increases customer satisfaction and increases sales.

But, how is it beneficial to businesses and merchants offering this service?

How Does It Benefit Businesses?

Consumer financing is designed as a win-win situation for both the consumer and businesses.

When a business offers a consumer financing option, ultimately it is opening the door for more business - and more business equals more profits.

Therefore, it allows businesses to maintain a high level of customer service and satisfaction.

More importantly, businesses can better focus their attention on the sale of their products.

From a consumers perspective, it may lift what may be a heavy financial burden, especially if a purchase is necessary.

For example, in the funeral care industry, consumer financing is a popular choice.

Dealing with the death of a loved one is devastating in itself, and sadly funerals are costly.

In such cases, consumer financing lifts the financial burden off of the family.

At the same time, the funeral organizers can arrange a lovely send off for the sake of the family and their loved one.

How Does It Benefit Merchants Who offer This Service?

There are many benefits that come with offering consumer financing.

Better yet, consumer financing is a great option for business of all sizes.

Here are a few reasons why...

Boosts Sales

Offering a consumer finance option may turn a browsing customer into a paying one. As a result, this increases sales and conversion rates.

Builds Customer Loyalty

Consumers love a company that has excellent customer service. Building customer loyalty is essential for any business regardless of size, niche and market.

Consumer financing helps to build trust between a business and its consumer.

And the more trust and loyalty the consumer feels, the more likely they are to make a repeat purchase.

Fast Approval

If a customer is in need to make a quick purchase, they are most definitely not looking for lengthy applications and a long wait for the approval.

By providing quick applications and fast approval rates, they are more likely to make a purchase.

Increases Average Spend

When you offer consumer financing, it increases the customers average spend.

Why?

Well, with consumer financing you have the ability to provide incentives and special offers to the consumer.

For example, you could tell the customer that if they kept up with payments, you could reduce the interest rate over time.

Low Risk

Building a solid foundation with a reputable lender helps lower the risk both for your business and your customers. Some lenders will also provide you with insurance coverage as an additional form of protection. Although this is optional, it may be worth it in the long run as customers are more likely to leave positive reviews and feedback.

Final Thoughts

When you go the extra mile for your customers, it does not go unnoticed.

According to research, many customers said they would not have made a purchase had the consumer financing option not been available.

All businesses, whether large or small, face the same challenges when it comes to trying to increase sales, conversion rates and customer loyalty.

Keeping track of what the customer is buying and why is key for the growth of any business.

Offering your customers flexible financing options may give you the competitive edge you need to boost your sales and increase brand awareness that will set you apart from your competitors.

Ultimately, consumer financing has proven to be both effective and practical. It gives flexibility to the customer to be able to make a purchase they otherwise would not have been able to have they needed an upfront payment.

Consumer financing poses many advantages for all types of businesses and niches, allowing you to build your brand, grow your customer base, and having a thriving and reputable business.