Today business can provide their customers payment options in terms. High priced services and goods are offered in terms of up to 60 months. This is advantage to business owners because they are able to widen their customer base. People who can’t pay in one large payment can still do business with them.
This method of allowing customers to buy products and services is enjoyed by consumers. A contract is made for customers to agree that they will pay the business monthly until the service or product is paid in full. Interest is also included in the monthly amortization. After the customer pays in full, he or she has now full ownership of the product.
Imagine the number of clients you will not be able to cover in case your business do not have a financing service. The price range for a financing usually starts at $500. Merchants like a jewelry store offer no credit check jewelry financing. By doing this they are able to offer their products to more clients.
A business can use their resources to act as the lender. The only problem with this is that the business should have a large fund to cover the cost of the product or service that was financed by the customer. Not all businesses can do this that is why there are consumer finance company that can help them.
This service provides immediate cash flow to the business. They will buy the installment sales contract from the business. They will be in charge of collecting the payments from the customer while the business can now restock.
So how do consumer financing services profit from these? They profit by buying the installment sales contract lower than the full price indicated in the agreement. By using this service all parties involved, -customer, business owner and consumer financing company can benefit.