Consumer financing is a program which can cause your incoming revenue to double or triple very quickly, because consumers are much more likely to make purchases when they are not required to pay cash for items immediately. Consumer financing involves allowing customers to take home the items they wish to purchase without paying any cash for it, and then making monthly payments over a period of time to pay off those purchases. There are three main levels of credit rating that consumers will fall into, and based on these categories, that will determine how much a merchant must pay for each of those consumer financing programs to be implemented.
Primary Financing
Relatively few consumers will fall into this category, because a very good credit rating is required. It’s the category which is most beneficial to both customer and merchant, because the customer plays the lowest interest rate and the merchant pays the lowest fee for the program. However, it’s also the least populous of the three major groupings in any consumer financing program.
Sub-Prime Financing
This group is by far the most populous of any of the three groups in a consumer financing program, because it consists of all those individuals who have average or slightly below average credit rating. Somewhere around 80% of all consumers who apply for the program will fall into this category, so merchants must be prepared to pay the fee for this group of individuals.
No Credit Check Financing
As its name would suggest, people who fall into this category do not have their credit checked at all when making purchases. They would automatically be assigned the highest interest rate on their monthly payments, and merchants would be obliged to pay the highest fee for including these individuals in the consumer financing program.
Thinking of implementing consumer financing?
It is a program which could cause your revenues to soar, but first you’ll need the working capital to put it into place. Contact us at Pendleton Commercial Financing so we can consider some options which might provide you with the necessary funding.
