Pros of Consumer Financing

Consumer financing can actually work very well for many businesses. In this article, Find out the pros of consumer financing.

Beneficial for the buyer. Most people who use consumer financing don't have the cash on hand and this is a good way for them to be able to purchase a new product or a special tool.

● Beneficial for the seller: Many businesses prefer to offer financing as it can be beneficial when it comes to getting customers in and out, especially if you are in a service industry. This will help you keep your customer base much longer than you would without consumer financing.

● Easy to set up and manage: If you are a small business, chances are you don’t have the expertise when it comes to managing finances. Consumer financing can help you keep track of your customer’s payment dates and balances.

● The interest rate is not usually high: Most consumer finance providers will offer a lower rate on your customer’s loan than they would pay on their own personal credit cards. This will save on interest expense.

● You'll get to earn value-added commissions: This option is not necessarily great for the customer if he or she doesn't pay the loan back! However, many providers will throw in other useful tools as well.

● Good for seasonal items: If your business provides seasonal products, then you will benefit from offering the option of consumer financing. This can be very beneficial so that you can get more sales during peak seasons.

● Affordable: While interest rates can be a bit higher that what is offered on the bank, for some people they are the same. Some of your customers who have limited or no credit may also qualify for less expensive loans.

● You can control how many payments you want to handle: If you don't want to deal with processing multiple monthly payments, then you can simply allow your customer to pay on a shorter term and at a more affordable rate.

● Companies will gladly use you: A lot of companies will prefer to finance their products with you than to go through the hassle of finding a traditional lender. This will likely increase your customer base since they won't have to spend as much time looking for other financing options.

● You can get a great referral: If your company decides to become a consumer finance company, then you can give them referrals at anytime they choose and without any additional fees.

● You can get paid for each sale: This option will be a much better revenue stream for your company than if you only have a one-time fee on the loan.

● It doesn't take a lot of time or effort: Since there are lots of companies offering consumer financing, you can simply outsource the task to them.