Spiffs: What they are and why they could be bad for you
As a customer, it's essential to be aware of various practices in the retail world that may impact your purchasing decisions and financial well-being. This is especially true if you choose to finance your purchase. When you’re considering a financing provider, you want to feel confident that any recommendations aren’t potentially motivated by a sales incentive.
One such common sales incentive is the use of spiffs. Spiffs aren’t directly advertised to or beneficial for the consumer. Instead, it’s a perk that the business enjoys. But what exactly are spiffs, why do companies engage in them, and most importantly, how can they be detrimental to you as a customer?
What are spiffs?
The word “spiff” is short for “sales program incentive funds.” Spiffs aim to motivate salespeople to promote certain offerings over others and can range from modest amounts to significant sums.
Spiffs can be both cash or non-cash rewards – think gifts, bonuses, or meaningful experiences. A financing provider, for example, can provide cash bonuses to salespeople each time they get a customer to use them, incentivizing them to promote their specific financing option.
Why companies use spiffs
Companies typically utilize spiffs to increase sales, drive revenue, and boost motivation. Additional incentives can create a sense of competition and excitement, rewarding those who meet or exceed their sales targets.
Spiffing is fairly common in various industries, including lease-to-own financing. A lease-to-own finance provider can leverage spiffs to incentivize their partners to focus on offering their products first to customers. In such situations, it’s not uncommon for a sales rep to receive a cash bonus for each funded application. While this can be beneficial for both the lease-to-own provider and the retail partner, customers need to be cautious of potential biases and limitations that may arise from them.
Why is this practice not good for consumers?
Spiffing can result in higher total costs of lease and more expensive financing for consumers. When retailers are incentivized to promote a specific offering, biased recommendations, higher costs, limited options, and high-pressure sales tactics can follow.
Consumers interested in doing business with fair and transparent companies are likely to find spiffs unethical. In fact, because spiffs can encourage questionable actions and behaviors among salespeople, they are illegal among federal government or non-taxable companies. In such cases, the U.S. Department of Justice labels spiffs as kickbacks and are therefore not allowed.
Why doesn't Snap Finance indulge in spiffs?
At Snap, we have your back when it comes to lease-to-own financing. By not participating in spiffing practices, we ensure that our focus remains on offering the best financing solutions to our customers.
We believe customers shouldn’t have to pay more than they can afford for lease-to-own financing and are committed to providing you with peace of mind throughout your leasing journey.
How to safeguard yourself
To safeguard yourself when exploring financing options, we recommend taking the following steps:
1. Ask for all options
Inquire about all available financing options, ensuring you have a comprehensive understanding of the choices available to you.
2. Inquire about total cost of lease
Ask for a breakdown of the total cost of the lease, including factor rates, fees, and any additional charges. This will help you make an informed decision based on the full financial picture.
3. Discuss payment terms
Explore different payment plans or ownership options and find the one that best aligns with your budget and financial goals. Understanding the payment terms and schedule will help you manage your lease effectively.
Your financial health matters to us
Spiffing, while common in various industries, can have adverse effects on consumers. At Snap Finance, we firmly believe in providing transparent lease-to-own financing, free from the influence of spiffs. By asking the right questions and being informed, you can avoid any potential conflicts of interest and make the best decisions for your financial situation.
The advertised service is a lease-to-own agreement provided by Snap RTO LLC. Lease-to-own financing is not available to residents of Minnesota, New Jersey and Wisconsin.