Why should your company provide consumer financing?

Businesses that provide financing to their consumers can maximize their sales, secure larger contracts, and improve their average sales transaction size. Instead of paying the full price upfront, financing allows customers to make regular, manageable payments toward the cost of an expensive item or job. Customers that are about to make a major purchase frequently prioritize cost; they want to know if the product or service they need will fit into their budget.

You can mitigate higher costs for your customers and shift the focus away from costs by using customer financing. Instead, demonstrate to customers how reasonable monthly payments can help them afford exactly what they want. Financing lets you change the way you talk about sales, putting less emphasis on cost and more on the value of the product.

What exactly is consumer financing?

Consumer financing splits the total cost of expensive goods or services, allowing customers to make smaller loan payments over a set timeline. Customers make monthly, bi-weekly, or weekly payments instead of paying the full price at the time of purchase.

Customers are usually charged interest as part of their loan payments. Interest rates vary depending on the loan terms, and businesses sometimes promote zero-interest financing as an offer to potential customers in some situations.

Why should you provide financing to customers?

The following are the major business advantages of providing financing options to your customers:

1. Increase your sales and average transaction size.

Financing raises the purchasing power of a customer, making major purchases more accessible. Financing not only makes it easier to complete a potential sale, but it’s also an effective tool for upselling. You can show customers how a slight increase in their monthly loan payments allows them to afford upgrades or additional products without offering discounts or other incentives. Financing can help you increase your revenue: one study found that businesses that offer consumer financing increase their average sales transaction size by 15%.

2. Increase your competitiveness.

Offering consumer finance can provide you with a competitive edge, allowing smaller businesses to compete with national chains. Businesses can boost their competitiveness by offering additional customer incentives. Consider offering promotional programs to customers, such as payment deferrals, interest rate buy-downs, or no-interest loans, to improve the deal. These incentives can assist you in closing sales and generating recurring business.

3. Bring in new customers

Offering consumer financing options can help your business attract potential customers. If a potential customer is shopping for a major purchase, they could be more likely to choose your business over a competitor that does not offer financing. It can also assist you in establishing repeat customers, as consumer credit programs frequently encourage clients to return for future purchases. According to one study, 93% of customers who used consumer financing for the first time would do it again.

 4. Get paid quickly

One typical obstacle to small businesses offering finance is that it might have a negative impact on their cash flow because business owners do not receive the entire sales price at the time of purchase. However, by partnering with a third-party loan provider platform like HelloRates, you eliminate the dangers associated with running your own lending program.

How to Provide Financing to Customers

Customer financing enables businesses to provide their customers flexible payment alternatives when they are unable to pay the entire price of a large purchase. Using a third-party lending platform like HelloRates is the simplest and safest way to provide customer financing .

Because most customers do not know how to ask about financing when researching for a major purchase, it is critical that you present financing possibilities with potential customers at the beginning of the sales process. Give details regarding their costs when they opt for a finance plan instead of paying the entire sales price up front.

By providing financing options during the sales process, you can show customers how a major purchase can fit into their budget, allowing your business to boost sales and average sales transaction size.