Get more customers back on the road for the holidays

Understanding the impact of low credit scores on tire shopping and financing

Nearly 102 million Americans will drive to their holiday destinations. But before those travelers go over the river and through the woods, they may need new tires and rims.  

And for many families, there's no room in the holiday budget for any unexpected expenses. That's especially true for those with credit issues.

Financing can help your customers get the tires they need to get back on the road. But what about customers who don’t qualify for traditional financing? Subprime or tertiary financing, including lease-to-own financing solutions, can help fill the gap for consumers. For merchants, tertiary financing can translate to new market opportunities, increased sales, and a competitive edge in the marketplace. 

Snap Finance surveyed consumers with and without credit challenges to better understand the impact of having a lower credit score. We wanted to know more about how those facing credit challenges, specifically those with FICO® credit scores below 670, get the tires and rims they need.

We found that for many, paying over time is the only way they can get the tires they need to get where they're going. Let’s take a closer look.

How lower credit scores impact how people shop for tires

When money is tight, people often put off spending until there’s no other choice. Among those with low credit scores, 87% of tire and rim purchases were for repairs, compared to just 11% of purchases for upgrades.

No matter their credit score, most consumers shop around for tires and rims at physical stores. However, those with lower credit scores are less likely to visit store websites and consumer reviews, which may mean they’re less ready to make a buying decision than other shoppers. Offering this customer segment more assistance, guidance, and product education can help retailers close the sale.

Deals matter to most tire shoppers, but to varying degrees. Among consumers with lower credit scores, 32% made their purchase sooner than planned due to a limited-time sale or offer, compared to 22% for other consumers. Previous experience with the brand, good consumer reviews, and a well-known brand are also important factors in their purchasing decisions.

Where do they shop? When surveyed about where they most recently purchased their tires, we found those with credit issues are more likely to shop local small businesses and big-box retailers than other consumers.

• Among those with lower credit scores, 28% purchased tires at a major tire store chain, 27% at a local small business, and 18% at a big-box discount retailer.
• Among those with higher credit scores, 40% purchased tires at a major tire store chain, 17% at a local small business, and 8% at a big-box retailer.

How lower credit scores affect how people pay for their tires

When the cost of tires is higher than budgets and savings allow, financing can help consumers get what they need now and pay over time.

Among consumers with credit challenges:

• 31% said they could not have paid for their tires or wheels without financing.
• 60% said financing makes purchases more affordable.

Paying over time helps shoppers get more expensive or better quality tires – or simply buy more of what they want or need. Financing can also help retailers increase their average order volume. On a recent purchase, 42% of those with low credit scores said financing led to them spend more.

Those with lower credit scores may not qualify for traditional financing or credit cards. As a result, just 12% have used a card to buy tires, compared to 56% of those with higher credit scores. Instead, consumers with credit issues are more likely to pay for tires with a debit card (45%), cash (27%), or other financing (14%).

For future tire purchases:

• 61% are interested in using a general-purpose credit card.
• 49% are interested in using store credit cards.
• 49% are interested in using an installment loan.
• 34% are interested in using lease-to-own financing.

Making a financing decision

How do consumers decide what form of financing to use? In-store advertising and a knowledgeable sales force play an important role in informing customers about financing options. Among those with lower credit scores, 29% learned about options to finance their tires and rims from store employees, 17% from the business’ website, and 12% from in-store advertising.

To help close the sale, ensure your sales team is well-versed in available financing options and can easily walk customers through the application process for each.

A more inclusive approach to financing

Offering additional financing options can be a lifeline for customers with lower credit scores, enabling them to get the tires and rims they need now.  

For tire shops, providing those options often translates to a broader customer base, increased sales, and the potential for stronger customer loyalty. A more inclusive approach to financing creates a win-win situation for consumers and businesses.

About Snap Finance

Founded in 2012, Snap Finance helps customers with less-than-ideal credit get what they need and want through thousands of U.S. merchants. Snap-branded solutions include lending and lease-to-own financing solutions to help you grow your business and attract new customers. Snap’s proprietary, machine learning-based decision-making technology brings modern payment options to consumers who may not qualify for traditional financing.(1)

For more information, visit snapfinance.com.

Snap-branded product offerings include retail installment contracts and lease-to-own financing. Talk with your local Snap sales representative for more details on which product qualifies at your store location. For more detailed information, please visit snapfinance.com/legal/financing-options.

Survey findings based on proprietary research from Snap Finance, 2023. 

(1) Not all applicants are approved. While no credit history is required, Snap obtains information from consumer reporting agencies in connection with submitted applications, and your score with those agencies may be affected.