How credit issues change the ways people shop and pay for appliances

New research finds financing options matter most to those with low credit scores

From roasting turkeys to baking cookies – and everything in between – appliances get a workout during the holidays. And increased use often highlights the need to replace refrigerators, stoves, dishwashers and other major appliances.

But paying for a new appliance upfront is never easy, especially this time of year. That’s why consumers often use financing. New research from Snap Finance found that 39% of those with lower credit scores could not have paid for their new appliance without paying over time.  

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

Here’s what the research showed.

Credit issues impact how people make buying decisions

Purchasing a major appliance is a big decision. Snap found consumers from all financial backgrounds shop around for appliances by going to physical stores and store websites. However, consumers with lower credit scores are less likely to use search engines and consumer review sites and other publications to help make their purchase decisions, compared to those with higher scores.

Those with credit issues are also more likely to shop multiple stores before making a purchase, with most (59%) shopping two brick-and-mortar stores. But people with higher credit scores are more likely to shop multiple store websites. For example, 19% of those with credit scores above 670 look at more than four websites, compared to 10% of those with lower credit scores.

Lower credit scores influence where people shop for appliances

Those with credit issues are more likely to purchase in a brick-and-mortar store (66%), compared to those with higher scores (53%). There are also differences in the type of stores they shop. While both groups most often purchase appliances from a home improvement retailer, those with lower scores said they are more likely to shop a warehouse club, discount retailer, or rent-to-own chain.

For recent major appliances purchases among those with credit scores below 670:

• 37% shopped home improvement retailers
• 16% shopped electronics or appliance retailers
• 13% shopped warehouse clubs
• 8% shopped local small businesses
• 11% shopped big-box discount retailers
• 7% shopped online-only businesses
• 3% shopped rent-to-own chain stores

Financing matters most for those with credit issues

Price, ease of purchase, and the ability to get an appliance quickly are the top purchase factors for those from all financial backgrounds. However, 52% of those with lower credit scores said the availability of financing was an important factor in their purchasing decision, compared to 34% of those with higher credit scores.

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

Among those with lower credit scores:

• 46% rely on financing to make major purchases
• 58% say financing makes purchases more affordable

Paying over time can help shoppers get more expensive or better quality appliances. Financing can also help retailers increase their average order volume. On a recent purchase, 44% of those with low credit scores said financing led to them spend more.

Credit issues influence financing decisions

Those with lower credit scores may not qualify for traditional financing or credit cards. As a result, they often need more options to allow them to pay over time. Among those with credit issues, just 14% have used a card to buy a major appliance, compared to 51% of those with higher credit scores. Instead, consumers with credit issues are more likely to pay for appliances with a debit card (28%), cash (14%), store credit card (29%), or other financing (14%).

Retailers that offer more options can potentially reach more customers and increase sales. For future appliance purchases, 40% would consider lease-to-own financing.

People from all financial backgrounds often ask for help as they decide how to pay for big-ticket items, such as major appliances. In-store advertising and a knowledgeable sales force play an important role in informing customers about financing options. Among those with lower credit scores, 42% said they learned about options to finance appliances from store employees, 36% from the business’ website, and 19% 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.

Takeaways for retailers

People with low credit scores often find themselves adjusting their shopping and financing behaviors to accommodate their financial situations. They may go without a big-ticket purchase or choose a less expensive item than the one they really want or need.

Offering financing solutions to consumers from diverse financial backgrounds can help customers get the appliances they need now – and help your business expand your customer base, increase sales, and build brand loyalty.

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 Snap Finance.

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.