Benefits of Consumer Financing | Why Your Business Needs It
by Chris Hopkins, on Sep 28, 2020 8:41:57 AM
If you've been watching TV lately I'm sure you've noticed how intensely auto dealerships and big box retailers promote financed offers. These guys have been offering consumer financing on large purchases for years and with good reason.
Financed sales allow consumers to break down large purchases into affordable weekly or monthly payments. This makes the goods more accessible, allowing a bigger audience to buy, thus increasing sales.
We all know how it works. Unfortunately for smaller businesses, the capabilities required to offer customer financing and maintain compliance with consumer credit laws have been out of reach. Until now!
Historically, customer finance has remained the competitive advantage of the few but there's good news for smaller businesses. Advances in financial technology services are changing the game.
advances in financial technology services have made it possible for companies to offer instant credit decisions to customers at no additional cost. These turnkey financing programs offer all the benefits of an in-house financing credit system without the risk or implementation costs. (Forbes)
Here at Ausloans we offer a turnkey financing program for businesses
Many businesses today, large or small are emphasizing consumer financing options as a means of encouraging their customers to buy, and potentially increase their order value and complete sales. Consumer financing has grown and will continue to grow and the business that doesn’t have a consumer finance option may find themselves loosing sales as a result.
9 Benefits Of Consumer Financing For Your Business
Consumer financing offers advantages for every size of business. Here are some of its benefits.
Low Risk Solutions for your business and your customer
Having a solid professional relationship with a reputable finance broker will mitigate the risk for you and your customers. A reputable brokerage, finance applications made by your customer will be considered based on several criteria to ascertain the ability that payments can be honored. This decreases the financial risk to your customer, leading to favorable feedback and reviews — and referral business.
Drive the sales process
There will be times when your customer has done their research, chosen your company as the preferred supplier, arrived at your premises with their ideal purchase in mind only to find out that particular product is out of their reach. It could be they never calculated the extra unforeseen administration or installation costs — and the sale falls through.
The benefit for business owners in offering a consumer finance option is that it provides the perfect financial solution and eliminates the stress of the unknown for you and your customer. A consumer finance option leaves you to conduct business as usual, once an application is approved the payments are processed quickly and the sale can go ahead.
Attract more customers
Financing attracts more customers and there's a lot of evidence to support this. A recent report by Forester showed that businesses that offer finance sell 20% -30% more than businesses that don't. If you're not offering finance you're probably losing business to a competitor that does.
By providing a consumer finance option for your customers, you increase the propensity to generate more sales as well as larger sales orders. This is especially true when customers are contemplating the purchase of large-ticket items. The ability for your customer to pay over time rather than having the finance in place becomes a powerful motivator in your customers path to purchase. Offering a consumer finance option is such a statistically measurable opportunity to significantly increase sales.
Increase the value of sales
Average order size increases 15% among businesses that offer consumer credit and 93% of first-time consumer credit users said they would use consumer credit again. (big Commerce)
Businesses that offer financed options not only increase sales but increase the average order value of a sale. This is particularly evident with aggregator finance.
Often consumers are unaware of their real purchasing power and can be shocked by exactly how much they are eligible to borrow. As an example a customer wants to borrow $20 000 however after a quick credit assessment from a broker they learn that they can actually borrow $40 000. Armed with this information consumers often spend more than originally planned.
Increased Loyalty, Trust & Referrals
Experience-Driven businesses see almost 2x higher YoY growth in customer retention, repeat purchase rates and customer lifetime value than other businesses. (Source: Forrester and Adobe)
As a business owner one of your goals — if not your main goal, is to provide a service that is memorable to your customer which in turn develops a loyalty and trust. By providing your customers with the ability of financing their purchase via a consumer finance option you will encourage customers to return and most importantly, refer your services to their friends and family. In fact, a few satisfied clients can result in countless referrals, and repeat business is more likely if you are willing to provide flexible payment plans and reasonable rates.
Fast Payments & Increased Cash-Flow
Arguably one of the biggest benefits for business owners is that with financed sales payments are processed quickly after the loan is approved. That means you get paid upfront, in full, for the purchase with the payment default risk lying squarely with the lender. You don't need to jeopardize your business cash flow to support financed sales.
Its Free To Offer Finance
While some customer finance options may charge monthly fees and or transaction fees with the right finance solution offering finance is free. Using a finance aggregator solution like Ausloans Zink not only can you avoid transaction fees normally associated with credit card based finance solutions, you also have the added bonus of earning extra income from bonuses you receive every time a customer obtains finance through the aggregator.
54% of customers have higher expectations for customer service today compared to one year ago. (Source: Microsoft 2020)
As a business one of your priorities should be – if not already — customer experience. Customer experience is certainly an umbrella word that covers many touch points between your business and the customer. One of those experiences that ranks highly for customers is the satisfaction of choice, and with that comes the expectation that choice is available.
If you're not offering finance you're probably loosing business to a competitor who does.
Which consumer financing option should you choose?
Now that you know the benefits of offering finance the big question is which finance solution should your business offer?
Arguably the best solution is to use a finance aggregator solution and here's why.
A brokered finance solution for your customers gives them access to a much larger lender pool increasing the probability of you closing the sale. With Ausloans customer finance solution for SME's your customers get instant access to one of the biggest lender pools in the country. With over 40 lenders, including a group of specialist lenders for people with a rocky credit history, we close 4 out of 10 deals that most dealerships throw in the bin.
Other benefits of using Ausloans finance include
- Fast finance qualification and approval so sales can proceed quickly.
- Seamless, online, paperless finance application process for your customers.
- Professional brokerage staff to manage the entire loan process on your behalf.
- Unparalleled marketing and resource support to help you promote your financed offers.
At Ausloans we provide finance aggregator solutions for both small businesses, dealerships and brokers. Ready to get started. Take action today and start offering your customers great finance solutions tomorrow.