What Financing Options Should You Offer Your Customers?
If you’re putting together your first business to consumer finance program, the options can seem a little daunting. With a range of offerings from different lenders, it can be hard to figure out whether you need one program with a lot of options or a few different options for programs. Here’s how you figure it all out.
Primary Programs
If you’re looking to provide your customers with the most generous terms and rates available, these programs tend to be the ones that offer the least expensive financing. The trade-off is what you would expect, though. These programs also require customers have qualifying credit ratings, so they turn down a fair number of applicants. If you’re looking for a program that lets you capture the most business possible, they are not it. They can be the best trade-off between new business and value if your company is aiming its goods and services at the right audience, though.
Secondary Programs
These programs service a wider base of customers and have lower requirements for lending, but they also cost the customer a little bit more. This can make them unattractive to credit-savvy customers shopping for the lowest rate, but it can also be a good value point if your aim is to attract a wide range of customers while offering competitive short-term credit. The programs at this tier do reject some applicants, but they allow customers with fair credit access to your business to consumer finance program.
No Credit Check Programs
Tertiary programs also go by the name above because that’s what they generally are. Most lend to anybody, and the risks that come with that are carried in the interest and other financing costs. This is a great way to make sure you can always offer credit to customers, but it’s going to price some customers with higher credit scores out of the service if the interest just can’t compete with the options they can already access.
Tiered Programs
The solution most businesses look for is a tiered program with a financial partner capable of providing at least primary and secondary services, and in some cases all three levels. This allows the credit costs and line size to flex with the consumer’s credit and optimizes your customer base. If you can find a single program that manages this, it’s a great idea to go with it. Otherwise, you might want to consider offering multiple options to your customers. That way, everyone will get a great deal on financing with your company.
