As a business owner, one of your goals is to increase sales and profits, so that your business and your employees can thrive. Providing consumer financing is a way to allow customers to purchase items that they otherwise would not have been able to afford, thereby increasing sales and profits.
There may be an abundance of products in your store that people would love to purchase, but they simply can’t afford. Instead of being bought, these items just linger on the shelves, potentially damaging your inventory turnover rate and preventing your profit margin from growing. You could decrease the price, but that would also decrease the profit you can make on the purchase. Fortunately, consumer financing can make a big purchase more accessible to your customers.
Instead of having to pay $500 for that television or $2,000 for that couch at once, which many may not be able to do, financing allows consumers to pay a smaller amount each month. By offering customers this option, items that were once too expensive to purchase may not be anymore. Anyone who has paid monthly payments for their car or house knows how advantageous this can be.
A business will generally use a finance company to offer consumer financing. After a shopper applies to receive funding, you can contact the finance company, provide the customer’s information and receive notification regarding the customer’s monthly payments. The buyer may only need to wait several minutes to receive approval.
The consumer will usually need to pay interest for this opportunity, but being able to have something that they otherwise would not have been able to afford will often make the interest payment worth it. Furthermore, you can mitigate the problems that interest may cause some customers by offering incentives like a gift card or the ability to not pay any interest in the first month. These incentives plus the ability to pay smaller payments over time can make expensive products more affordable to more people.
Furthermore, unlike in layaway your customers don’t need to wait until completing their monthly payments before they can take their product home. Instead, they can take the product home immediately. As a result, your sales and, therefore, your profit will typically increase. As an additional benefit, you will often have a steady income flowing into your company that you can rely on each month.
Many individuals simply cannot afford to purchase big ticket items. By making these items more affordable through consumer financing, you can increase your company’s sales and profits and strengthen your business’s health.