Although large companies have been offering consumer credit products for a long time, smaller businesses have only recently begun to take advantage of this payment option. In fact, it’s not difficult for companies of any size to initiate a consumer financing program that is attractive to your customers and beneficial to your small business. Here’s how to go about it.
The Basics of Consumer Credit
Consumer credit functions as an alternative to credit cards in that you offer a line of credit to your customers that they pay off in a series of installments. After customers provide answers to a few qualification questions and receive approval, the sale is finalized. As the retailer, you receive full payment in a matter of days, and afterwards, the lender handles the payment relationship with your customers.
Benefits of Consumer Credit
Statistics show that by offering consumer credit, businesses experience a significant increase in sales. Without the option of this form of consumer financing, customers often refrain from purchasing expensive items, but when consumer credit is available, they are more likely to make major purchases and increase the amount of goods they buy during holiday shopping. In addition to easing the financial burdens of customers, consumer credit allows retailers to swiftly receive 100 percent of the purchase price and leave the collection process to lenders.
When you provide consumer credit, you have the chance to increase sales through special financing offers. For instance, allow your customers interest-free payments if they pay in full within a certain period of time. You can also advertise special financing incentives if customers place orders that are above a certain monetary amount. Customers can have their choice of a range of payment terms such as six, 12, and 18 months.
For more advice on consumer credit and other consumer financing possibilities, get in touch with IRC Commercial Lending.