As the day has passed our needs will increase. With the increasing needs, we have all updated every process. We can also see huge changes. The way of business has been changed now. Now there are a lot of competitions.
If you are a business owner and want to stay consistent then you have to follow all the trends. Then only your business becomes a perfect business. Consumer Financing is a process that can help you to get more benefits from even a small business.
What is Consumer Financing?
Consumer financing is also known as customer financing. It is an offer that is given by a seller. There are many people who are unable to pay a huge amount while buying a product. And for this short-term loans do not suit well. A business owner offers them to purchase a product or a good service and pay over time. Buying now and paying later is one kind of consumer financing.
As the pandemic covid-19 strikes over the world, the financial conditions of individuals become Detroit. As a result, many people are not able to buy products, which affects a business. Check out the best investment ideas in India and income tax benefits. Consumer financing can help them. With it, they can make low monthly payments for a set period of time. By this, a customer can purchase an expensive thing whatever they want. For much more, sales merchants can offer this to their customers.
Types of Customer Financing:
There are many types of customer financing. Those are:
- Primary financing
Primary financing is the process where the business is the leader and they offer their customers their own financing products. It is the most involved process with customers than other processes.
- Third-Party Financing
Third-party financing is the process where small business owners rely on a third-party financing provider to act as a lender at the point of sale. In this payment process, a customer has to pay the whole amount of the products in a certain time period often through monthly payments. These companies always follow a strict form of financing compared to primary financing. In some cases, these programs become interest-free. Which is beneficial for a buyer.
How to Offer This?
Customer financing is a very effective system. Through research, we come to know that if a company offers consumer financing to their customers then the rate of order increases by 15%, and there are 93% of customers who use this method and give the guarantee that they will use it again. So it can increase the rate of sales. So now we are discussing how you can offer your customers Customer financing.
Customer’s Financial Problem
At first, your customers see the products online or from your showroom. They like the product. But maybe the product is quite expensive and they can not put the whole amount of effort into it. Then they apply for Customer financing.
Then you have to be sure about your financing option. Always go for well-advertised offers that offer customer financing so potential buyers are aware they have this option. According to your business, give your customers to choose the online checkout cart, on their smartphones, or through your POS system.
Let Your Customer Know
Tell your customers about the scheme and let them decide if they want to purchase it or not.
Accept and Review Customer Financing Applications
You can offer them in-house financing or Third-party consumer financing.
- For in-house financing, you have to use an evolution process. It helps to determine a customer’s creditworthiness. If you are selling high-priced products or services like furniture, appliances, electronics, or home improvements or repairs, then this is best for you. You can use QuickBooks online app which helps you to send your customers the pay-enable online invoices and your books are automatically reconciled. That helps you to focus on your business most of the time.
- And for Third-party consumer financing, you have to choose a company. They will take care of approving or rejecting consumers. This process has increased thoroughly nowadays. AfterPay, Affirm, Klarna, PayPal, Quadpay, are some popular online third-party financing providers.
When the customer approves the process you can get the full payment of the product immediately. And the customer gets the product or the service right away. They can get the payment schedule and pay for the product through installment. In the payment schedule, it includes how much money they have to pay upfront and the rest of the payment will have to be paid in how many parts.
Then you have to collect your customer’s payment according to the payment plan agreement monthly or weekly.
Consumer Financing is not a tricky process but a beneficial process. It can help a company to get more and more customers and a customer to buy all the things which they cannot even effort at one time. So be consistent in the marketplace and choose Consumer Financing to help your customers as well as yourself.