In the simplest terms, consumer financing is when a business offers financing options directly to a customer. Businesses that offer financing to customers typically do so through an established consumer finance program that makes use of an established set of lenders across a number of credit tiers.
Customers may seek financing directly from businesses for several reasons. They may not be able to afford to purchase a product or service otherwise. A great example of a scenario where this might be the case is a customer that needs a sudden or unexpected service, such as veterinary care for a pet that has an emergency medical issue. In this instance, financing acts as a lifeline for the customer, allowing them to get the care they need for their pet without having to pay out of pocket.
Another example is a customer who is making a large purchase and wants to pay for it over time. They may even be able to afford to purchase the product or service outright, but choose to finance it to take advantage of benefits such as:
- The ability to pay for the product or service over a longer timeline, freeing up cash flow in the meantime.
- Building credit.
- Avoiding a short-term budgetary impact that may affect the purchase of necessities or other planned purchases.
Many types of businesses offer consumer financing, ranging from furniture stores to jewelers to dentists to automotive shops. The motivation for seeking consumer financing options may differ by industry, but ultimately it comes down to customers seeking flexibility.
Because consumer financing is in high demand, it is in the interest of retailers of all sizes to offer consumer financing options to their customers. Failing to do so could result in lost sales for businesses in all kinds of industries. Additionally, along with increasing the chances of closing sales in the short term, a robust consumer financing program will help a business establish mutual trust with customers. This will help the business build customer relationships that last for years to come.
Beneficial to both customers and businesses, consumer financing is an excellent tool for helping customers make purchases and businesses make sales. A reputable partner like Financing Your Way can help you establish a consumer financing program that makes sense for your industry. Learn more about establishing a consumer financing program today.