If you've been paying attention to the news or watching TV recently, you've probably seen how aggressively big box stores and car dealerships push their financing offerings. For many years, these individuals have been giving consumer finance for major purchases, and there's a solid reason for it.
Customers are able to spread the cost of pricey items out over a longer period of time and make weekly or monthly payments via financed sales. This makes the products easier to reach, which enables a larger audience to purchase, ultimately leading to an increase in sales.
Everyone is aware of the process involved. The skills necessary to provide client financing and maintain compliance with consumer credit rules have been out of reach for smaller enterprises, which is unfortunate since these capabilities are essential.
The ability to provide client financing has always been reserved for a select few companies, but there is some encouraging news for companies operating on a smaller scale. Recent developments in the realm of financial technology services are shaking things up.
Companies are now able to provide immediate credit determinations to their consumers at no extra cost as a result of advancements in the services provided by financial technology. These turnkey financing programs provide all of the advantages that an in-house financing credit system would, but without the risk or the expenses associated with deployment.
There is a growing trend among firms of all sizes in today's market to emphasize Consumer Lending Solutions as a way to entice consumers to make purchases, maybe raise the average order value, and ultimately close more deals. The availability of consumer financing has increased in recent years and will continue to do so in the next years; as a consequence, a company that does not provide any kind of consumer financing may discover that it experiences a decline in sales.
9 Advantages That Your Company Can Receive From Obtaining Consumer Financing
There are benefits associated with consumer finance for all types and sizes of businesses. The following are some of the advantages it offers.
Low-Risk Financial Solutions for Your Company and Your Clients
You and your client’s exposure to risk will be reduced to a manageable level if you have a strong professional connection with a reputable finance broker. If you run a respectable brokerage, the credit applications that your customers submit to you will be evaluated based on a number of factors to determine whether or not the customer's payments may be fulfilled. This lowers the financial risk that your consumer is taking, which in turn leads to positive comments and evaluations, as well as revenue through referrals.
Drive the process of making sales.
There may be instances when your consumer has done their homework, selected your firm as their favorite supplier, and arrived at your establishment with their perfect buy in mind, only to find that that specific product is out of their price range. It is possible that they did not include in the additional expenses of unexpected administration or installation, which would result in the transaction falling through.
The right financial solution is provided, and the worry of the unknown is eliminated for both you and your client when you provide a consumer finance option as a payment choice for your customers. This is one of the advantages that consumer financing has for company owners. A consumer financing option allows you to continue operating your company as you normally would; after an application is granted, payments are rapidly handled, and the transaction may go forward as planned.
Bring in a larger number of clients.
There is a lot of data to suggest that offering to finance to clients brings in a greater number of customers. If you do not provide financial services to your customers, you are undoubtedly losing business to a rival who does.
Increase sales
You may boost the likelihood of generating more sales as well as bigger sales orders by giving your clients the opportunity to pay for their purchases using consumer financing. This is particularly important to keep in mind when potential consumers are thinking about purchasing expensive things.
If a consumer can spread out their payments over a period of time rather than having to come up with the money all at once, this may be a great inducement in getting them to make a buy. The ability to dramatically boost sales, which can be measured statistically, may be created by providing customers with a consumer loan option.
Boost the overall value of the sales.
Companies who provide customers with the option to pay for their purchases with financing during consumer Lending Solutions not only see a rise in total sales but also in the average amount spent on those sales. This is especially clear with regard to aggregator financial services.
A lot of the time, customers have no idea what their actual buying power is, and they are often surprised when they find out how much money they are entitled to borrow. When customers are armed with this knowledge, they often spend more than they had initially expected.
Greater Loyalty, Trust, and Referrals for Financial Gain
Businesses focused on the customer experience enjoy roughly twice as much year-over-year increase in customer retention, rates of repeat purchases, and customer lifetime value as other types of companies.
As the owner of a company, one of your aims, if not your primary goal, should be to give a service that leaves a lasting impression on your clientele, which will, in turn, foster loyalty and trust on their part.
If you provide your clients the option of financing their purchase via a consumer finance program, you will increase the likelihood that they will shop with you again and, more crucially, that they will recommend your company's services to their friends and family. In point of fact, a small number of happy customers may result in an enormous number of word-of-mouth recommendations, and repeat business is more probable if you are ready to provide flexible payment options and fair prices.
Increased Cash Flow in Conjunction with Rapid Payments
After the approval of the loan, payments for financed sales may be executed quite rapidly, which is perhaps one of the most significant advantages for owners of businesses that engage in such transactions. This implies that you will get the whole amount of money for the transaction up front and in full, with the lender bearing the risk of payment default. It is not necessary to put your company's cash flow in jeopardy in order to support financed sales.
It does not cost anything to provide financial assistance.
Although there are certain client financing choices that may charge monthly fees as well as transaction costs, providing financing does not cost anything if the correct financing solution is used. If you use a finance aggregator solution, you can not only avoid the transaction fees that are typically associated with credit card-based finance solutions, but you also have the added benefit of earning additional income from bonuses you receive every time a customer obtains financing through the aggregator. This is a significant advantage over simply using a credit card to obtain financing.
Conclusion
If you don't provide financing options to your customers, you're probably going to lose business to a rival that does. Your consumers will have access to a much bigger lender pool when you provide them with a brokered financing solution, which will increase the likelihood of the sale being made to your company.