Don’t let merchant rates get in the way!
Although many customer finance options offer a great convenience to consumers, many retailers see it as a hassle. But it doesn’t have to be! If it’s good for customers, it’s good for you: it helps customers leave with a big purchase, when they wouldn’t be able to afford it otherwise, by allowing them to make their payment in monthly installments. As a result, you get more sales, and you and your customers are both happy. Read on to learn why launching a financing program is worth it and how you can make it work for your business.
Merchant Rates/ Merchant Fees in Customer Finance Programs
Many business owners don’t adopt customer financing because they worry about excessive merchant fees, and for good reason. Financing won’t benefit your bottom line if the lending companies take a big cut of your profit. Merchant fees are there to assume the risk of financing the customer. The fees vary depending on the industry and financing program. However, they’re not usually all that bad: generally, in the range of 1-5% of the entire financed sale. In some cases, there may be a flat monthly rate. In any case, there are a variety of options and programs from a variety of lending companies.
Though it’s possible to bypass merchant fees entirely by running your own financing program, we don’t generally recommend this. It takes up a lot of time and effort to keep track of all your customers’ payments, follow up with customers who don’t pay on time, and comply with the many laws and regulations governing consumer credit. In most cases, it makes more sense to hire out this service to a lending company so that you can focus on helping your business grow and thrive.
Financing Options Without Excessive Merchant Fees
The lending company you choose will depend on your particular needs. There’s no one-size-fits-all solution because no customer’s credit history is the same. To find the best customer finance options for your industry, you’ll have to shop around. You’ll need to find one with a variety of options to fit a wide range of customers, quick response times (on-the-spot approval is great, so customers can leave with their purchase) and low interest rates (high interest rates=unhappy customers!). You will also want to find a program with good customer service and support, so that you can contact them with any questions or problems and get solutions fast. You’ll also want to look for quick deposit of funds and, of course, low merchant rates.
You can shop around yourself—there are many lending companies on the Internet. Or, to make things even simpler, you can find expert guidance at FinancingYourWay.com to help you find the best options for your business. We’ve helped many merchants to successfully launch their retail finance programs, saving them time, stress, and money by guiding them through the process and connecting them to the best lending companies for their needs.