Consumer financing is a valuable tool for shoppers needing alternative payment options for big-ticket purchases. Unlike credit cards, it provides the freedom, flexibility, and predictability that shoppers want and need. Ultimately, consumer financing helps businesses deliver a better customer experience, saving shoppers time and money and reducing the stress of mounting credit card debt. Customer satisfaction matters regarding their finances and the payment options you provide at purchase.
Here, we explore why providing consumer financing is the better choice for your business and how it increases the value of your customer relationships.
The Cost of Running a Business
Regardless of what you sell, operating your business requires capital. Companies must realize there’s a fee associated with selling their product. Real estate for your building, marketing budgets, employee wages and benefits, even coffee in the workroom: these expenses add up and contribute to the cost of running your business.
Every decision you make can bolster your growth and success. The way you treat your customers, especially regarding their finances, has the potential to add significant value to your company. Offering payment options is crucial to delivering a positive customer experience and establishing long-term relationships with your customers, both of which help increase your revenue and grow your business.
Customer Options at the Point of Purchase
When customers face a large upfront sum and don’t have the cash to cover the cost, they have two options: find a way to pay now, like through a payment plan or credit card, or choose not to buy. In the latter case, they might try to save up over a few months or even years, or they might forego the purchase
But if they want to buy now or if it’s an emergency purchase, they need realistic options. For example, if a homeowner needs a new furnace in the dead of winter, or wants to buy an engagement ring, they want to purchase it now, not years from now. Businesses must provide alternatives to cash payment so customers can shop with them today. Many times, companies choose to offer only a credit option, which can result in negative consequences for both the shopper and your business.
The Trouble with Credit Cards
Credit cards can turn a one-time purchase into a long-term, high-interest investment that the shopper might not have been prepared for. When a business offers credit card payments as the only non-cash or non-debit alternative, the customer is the one who pays:
- Astronomical Fees
Revolving credit cards from providers like Synchrony have astronomical APRs, with some as high as 39 percent! When the only option for big-ticket purchases is a credit card charge, shoppers face immense interest costs over a longer repayment period.
- Variable APR Rates that Hurt Shoppers with Bad Credit
Most credit card companies base the APR on the individual’s credit quality. The poorer the credit, the higher the APR. That means customers already struggling with credit card debt are put in a position where completing payments is even more difficult.
- Penalty APRs
If a customer misses a credit card payment or payment is returned, their repayment terms are adjusted with a penalty APR. That means higher payments until their purchase is paid off.
- Overwhelming, Compounding Interest
If a shopper can’t pay their balance every month, interest compounds until the payment is complete. Compounding interest can be brutal, overwhelming customers and trapping them under high interest and fees. Customers who charge their purchase to a high-interest credit card could pay thousands in interest throughout their repayment.
Enhancing the Customer Experience with Consumer Financing
Consumer financing is the ideal alternative to credit card or cash payment options. Consumer financing empowers shoppers to buy what they want, when they want, with clear and consistent repayment terms. UCFS approaches alternative payment options in a way that serves your customers while benefitting your business.
- Low Interest Rates
Unlike credit card providers that charge nearly 40 percent APR, UCFS charges between 17.99 and 24.99 percent, depending on the financed product or service. When you offer financing through our platform, you instantly reduce your customers’ total cost because their interest will be significantly lower.
- Consistent APR
UCFS does not increase APR to the consumer. We don’t charge penalty APRs, which means your shoppers have consistency throughout their loan repayments: equal monthly payments with no compounding interest.
- Fair APR for Your Customers
Unlike most credit cards, UCFS’s model ensures consumer credit doesn’t affect APR. Partnering with UCFS means you provide every approved customer with fair, reasonable, set rates until they’ve repaid their loan.
- Set Repayment Period
When customers sign their contracts, you set their repayment period. Our autopay option helps ensure your customers never miss a payment, and because payment is the same every month, they can plan accordingly as they budget.
UCFS prioritizes shorter repayment periods so you can better serve your customers. The less time on their contract, the less interest they will pay.
Your customers also have the option to repay their loans early with no fees, allowing them to save even more on interest.
The True Value of Customer Satisfaction
Customer satisfaction matters when you’re choosing payment options for your business.
Many businesses need to realize that value is found in more than a one-time sale. Customer satisfaction significantly impacts your bottom line and provides massive value to your business over time. Providing a reasonable payment alternative that can save thousands of dollars’ worth of interest is a must for companies seeking long-term customer loyalty and the rewards of high customer satisfaction.
Consider this: your business could lose integrity and trust if you had customers pay by credit card, and they realized months in that they were spending thousands more in interest when they could have paid less –– and over a shorter period. Would that customer choose you for future purposes? Would they recommend you to a friend or leave a positive review?
If you only offer cash or credit card options, you’re treating your customers poorly.
But when you offer consumer financing through United Consumer Financial Services, you provide a payment alternative that empowers shoppers to make their purchases on their timelines, avoiding credit card debt and saving time and money.
UCFS provides a payment method that helps customers save money, giving them a positive experience with your business and their purchase. Consumer financing is an accessible, affordable option for your customers. Becoming a merchant with UCFS is simple, and you can get started right away. Reach out to our team to learn more about how offering consumer financing can increase customer satisfaction and provide long-term value to your business.