“Financing choices will not only assist you in closing a sale,” explains Dan Bourgeois-Capozzi. “They will broaden your customer base and assist you in developing long-term customer ties.”
Bad Credit Financing
Consumers do not fit into a one-size-fits-all answer when it comes to financing. Lenders like Payday Champion are providing loan products to assist individuals with less-than-perfect credit.
Other Financing Options
Dealers no longer deny customers who require a new set of tires, an unanticipated brake job, or suspension repair because they cannot afford it. There are lease choices, installment payment plans, and other payment alternatives. Experts increasingly urge that businesses offer a variety of financing solutions to attract the most significant number of customers. We asked the experts what tire dealers should look for in a financial partner, discussed credit with customers, and how these goods and services may assist complete the sale.
Collaborating with lenders
MTD: To appeal to a broader base of consumers, should dealers offer a suite of options rather than simply one service provider and one option?
Trey McQueen: Because financial situations and credit profiles differ significantly, dealers will benefit most from collaborating with a group of lenders who understand this and can collectively cover the whole credit spectrum. There is no such thing as a one-size-fits-all credit option. A suite of complementary lenders is appropriate for better serving consumers across the loan spectrum.
Large transactions, such as replacing tires or transmissions, are not always affordable out of pocket. However, all customers require tires, wheels, or car maintenance services from time to time.
Numerous primary lenders specialize in approving individuals with excellent credit. However, alternatives for credit-challenged clients are limited, which might result in your business turning away customers and people feeling defeated just because they can’t afford the bill upfront.
Credit-challenged consumers may find it challenging to obtain approval. These individuals have either not used many traditional sources of credit to help develop their credit or have had life events that have prevented them from making on-time payments, causing their credit score to decrease.
Because of their credit history, these clients may be regarded as “too hazardous” by a primary or secondary lender. AFF believes that all customers, including those in university education, should have access to the goods and services they require.
Dan Bourgeois-Capozzi: We believe that shops must understand the programs offered and how they match the demands of their customers. Credit is similar to tires in that you must have the correct size for your vehicle. You wouldn’t put a consumer who qualifies for a top program in a tertiary offer. That is not a good fit and will not result in customer loyalty. As a result, we built our program to offer customized terms based on an individual’s credit history.
Katapult Holdings Inc. CEO Orlando Zayas: Innovative tire retailers are now offering a variety of traditional and alternative financing alternatives at the checkout to enhance transaction volume and attract new clients they have previously been unable to trade.
Retailers who use Katapult to offer a lease-to-own option find increased repeat transaction rates and improved customer satisfaction ratings. Tire businesses that do not provide lease-to-own or no-credit-needed financing options are leaving money on the table, despite the availability of different checkout choices.
Today, half of the adult customers in the United States have a (credit) score of less than 700, and many have limited financing options. At the same time, 47 percent of today’s consumers require financing to make a $400 or higher buy. That isn’t to say that non-prime consumers aren’t out there shopping. Like the rest of us, they require specific items, including tires, to enjoy their lives to the fullest.
When it comes to purchasing durable items such as tires, customers are frequently forced to choose between purchasing lower-quality goods or not purchasing them. Offering lease-to-own options assist tire retailers in providing a path to ownership to this previously underserved market segment (and it allows) customers to obtain the durable goods they desire by leasing and paying overtime once they qualify through a transparent and fast application process that uses Katapult’s proprietary decisioning logic.
This is also advantageous to retailers. Forty-three percent of consumers are motivated to shop with select retailers that provide lease-to-own payment options.
Brian McNamee, Koalafi (formerly West Creek Financial Inc.) vice president of business development: We discovered that tire sellers who solely cater to a specific client niche could develop hidden buyers. These are potential customers that find your business and wish to collaborate with you but cannot purchase your product or service. That is why we strongly advise using a system that provides various payment options.