1.What Is Customer Financing
When a business offers Online purchase financing to their customers with the assistance of a professional finance company, this process is known as customer financing.
These customer financing options help the consumers with low budget or bad credit to pay for a purchase or service, they could not pay right away in cash or by credit card. Consumer financing is very helpful for both businesses and clients.
2.Need of Customer Financing
As much as it is crucial for businesses to Introduce Customer financing programs in their services, the same goes for the customers receiving
Financing services: On one hand the customer financing companies benefit in their product sales and on the other hand, a remarkable consumer base benefits from them as well.
If you are a small vendor and cannot afford to finance your customers then you’ll get assistance from solid finance providers known as third-party financing companies. This will help you gain customers as well as steady income flow.
If as a customer you have a low budget or bad credit then these customer financing programs are very beneficial for you. The various customer financing option will let you buy goods you want without making any compromise.
3.Types of Customer Financing Options
The primary financing covers the financing options that mainly rely on the customer’s credit scores. So, it could be determined if they are approved or not. In this type, interest is collected based on loaned amounts by the providers. Customers with high credit scores get lower Interest rates. Those with bad credit, or no credit at all, are not qualified for primary financing.
Secondary financing provides loan options that are available to all credit types. The financing providers evaluate more than just the customer’s credit scores at time of making approvals.
4.Customer Financing Provider Companies
Viabill is one of the companies which provides financing to small online vendors or businesses and offers customer financing to their customers. Viabill let the customers make payment in four equal installments while purchasing the goods which are of lump sum amount. You’ll need to pay a transaction fee of 2.90% plus 30 cents, the same as online credit card processing taxes.
For signing up for Viabil, no credit checks are required. Customers will find out almost immediately, if they are approved or not. Viabill expects 25% of the purchase at checkout and then, breaks the remaining three installments equally—with no interest or any additional fees. Viabill is an incredibly significant customer financing option for online businesses.
PayPal is particularly known to offer customer financing to small businesses. One of the functions of PayPal is the PayPal Credit which is a considerable way for online businesses, it provides customer financing to those who use Paypal for making and receiving payments. This procedure lets you add a financing banner to your online check out. When customers check out with PayPal on your website, a credit decision for your customer is made within seconds.
PayPal doesn’t charge transaction fees from merchants who already make payments through PayPal. If you are a PayPal user, consider it’s credit services to offer customer financing to consumers.
Afterpay is the business to offer customer financing to small purchases such as housewares, clothing or jewellery. To get an approval from Afterpay, customers are required to fill a form. The payment installments are divided into four parts. If payments are made on time , they offer zero fees and zero interest financing
To benefit from afterpay customer financing services, you need to pay 4-6% plus 30 cents for each transaction. This program has been used by big companies as well. After paying full money for purchasing directly, go to your account so that the shipping process gets started as soon as possible, just like any other purchase.
Financeit gives customer financing for bargains of up to $60,000. Their standard program is free and they do not charge any transaction fees either. The interested customer can apply customer financing by using his smartphone in the store only. Alternatively, he may visit the website with the help of Financeit digital tools and on approval, funds are received as early as the next day.
Financeit then transfers the total purchase amount to you within two-three business days and thereon, the company takes care of revenues. The interest rates charged for customers depend on their credit scores, place and the amount of the payment plan. Financeit is a considerable option for businesses who sell goods or services at a higher tariff point such as furniture or home restoration goods and services.
Customer financing programs are an elevation method for all the three entities involved I.e., the customers, the online vendors and businesses and the third party finance providers. If you belong to any of these entities, make sure to take benefits from customer financing services.