Why Businesses Offer Consumer Financing
Having a quality product doesn’t guarantee sales. Plenty of businesses have come and gone with a decent service that people either couldn’t afford or didn’t know they needed. In order to actually sell what you’re offering, you need to be able to motivate customers to buy. This is why so many businesses are offering consumer financing. When customers can access credit, they’re able to purchase goods through smaller payments and as a result feel less conflicted about parting with the money. This form of lending isn’t tricky or deceitful; it simply allows your customers to spend on their own terms.
Let the Numbers Talk
Choosing to purchase something can be a very reactionary decision. Consumers will buy an item simply because they see it’s being sold at a discounted rate, and they’ll also decide not to spend the money once they see the total cost with tax included. With the option to finance, a customer can make a purchase work around his or her budget. What starts as $1,200 gone in a single day can become $100 per month for a single year. The smaller number is easier to stomach, easier to budget and doesn’t change the value of the product.
The less daunting price tag also encourages customers to consider buying an extra thing or two. If a person had planned to spend $1,000 on something but is then given the option to break up the payments, he or she might decide to add another item to the order. Consumer financing provides customers with a great opportunity to make purchases without the subsequent buyer’s remorse.
Free Credit for All
The best part is that many company’s will offer this service for free, so you’re business doesn’t have to pay any fees and your customers can get what they want without the added burden of interest. You’ll still receive the full payment up front and the lending company will only collect on fees from the consumer if they default on the loan. The lender gets exposure, you get paid and the customer gets what they want without having to fast for a month because they blew their grocery budget. In a world where predatory lending has caused a lot of problems, consumer financing might just be your knight in shining armor.
You need to make sales to keep your business afloat, but you don’t want to make your customers feel pressured. Offering a line of credit to buyers can solve both those issues and leave everyone feeling confident about a business transaction.