Tertiary or subprime financing for retailers helps store owners convert more customers by bridging the gap between traditional credit-based approvals and no-credit-needed options. This guide breaks down how tertiary financing fits into the three-tier financing model, why tertiary financing is essential for modern retail success, and how merchants can use it strategically to capture more sales and foster long-term loyalty.
Takeaways
Tertiary financing often expands customer approvals beyond what primary and secondary lenders can offer.
It helps retailers recover declined sales and build stronger customer relationships.
Choosing a responsible tertiary financing partner ensures smooth integration and trustworthy service.
When customers apply for financing in your store, not all are approved by traditional lenders. That’s where tertiary or subprime financing for retailers comes in. It’s a powerful, often misunderstood layer of the financing ecosystem that helps merchants recover lost sales, expand their customer base, and keep more shoppers coming back.
What is tertiary financing?
Tertiary financing is the third tier of retail financing programs, following primary and secondary lenders. It’s designed for customers who might not qualify for traditional credit-based financing but still want a path to purchase.
Over the years, financing options have evolved to meet the needs of more shoppers. Primary lenders usually approve customers with strong credit. Secondary lenders serve those with fair or near-prime credit. Tertiary financing fills the remaining gap, giving merchants an inclusive way to help more shoppers complete their purchase.
These programs often use alternative approval criteria that go beyond credit scores. Instead, they consider income, employment, and payment history to make decisions. The result is a financing structure that expands access without compromising store profitability or customer satisfaction.
How the three-tier financing model works
To understand tertiary financing, it helps to look at the broader three-tier model that most modern retailers use:
Primary lenders. These are traditional credit providers, such as banks or branded store credit cards. They offer competitive interest rates but require strong credit histories and higher approval standards.
Secondary lenders. Secondary lenders serve near-prime customers – those who may have decent credit but not enough to qualify for top-tier offers. These options usually feature higher interest rates or shorter terms but still rely on traditional credit checks.
Tertiary lenders. Tertiary financing programs go a step further, often approving customers that traditional lenders decline. They offer access to no-credit-needed financing, including lease-to-own financing and loan options, to help more shoppers take home what they need today while paying over time.
Together, these three tiers create a complete system that maximizes approvals, giving merchants a better chance to serve every type of customer – from those with excellent credit to those building or rebuilding theirs.
Why tertiary financing matters for retailers
Without tertiary financing, a retailer’s sales funnel often stops short. Each declined application can represent a missed opportunity – not only in revenue but also in customer trust and future loyalty.
Tertiary financing fills that gap by helping retailers:
Reduce declines without adding hassles. Underwriting is typically based on more than credit scores.
Capture lost sales from declined applicants. Instead of turning away customers, stores can offer an alternative path to ownership that fits their situation.
Build brand loyalty through inclusivity. Shoppers remember stores that help them find solutions. A positive first experience can turn one-time buyers into repeat customers.
Retailers who adopt a full three-tier model often see measurable growth in approvals and sales, particularly in industries like furniture, electronics, jewelry, and tires – where large-ticket purchases are common.
How to choose the right tertiary financing partner
Not all tertiary financing providers are created equal. A strong partner can help integrate financing smoothly into your sales process while keeping customer satisfaction high.
When evaluating a provider, look for:
Simple integration and fast decisions. The best systems work seamlessly with your existing point-of-sale or e-commerce platform, offering instant decisions to keep checkout moving.
Transparent terms and straightforward processes. Clear communication builds trust. Ensure your partner provides straightforward lease or payment terms your customers can easily understand.
Reliable reporting and support. Access to performance data, sales reports, and responsive customer service is essential for managing your financing program effectively.
Retailers should also confirm that the provider aligns with their brand values, especially when it comes to treating customers fairly and promoting long-term relationships.
Snap Finance is a leading provider of lease-to-own financing. With simple integration, transparent terms, and access to reports and comprehensive customer and merchant support, Snap Finance has helped thousands of merchants serve more than 5 million customers since 2012.
Common misconceptions about tertiary financing
Many store owners hesitate to adopt tertiary financing because of lingering myths. To set the record straight, here are some of these myths and the truths behind them:
“It’s only for bad credit.” False. Tertiary financing helps a wide range of customers, including those without established credit or those rebuilding after financial hardship.
“It’s high risk.” No. Typically providers, including Snap Finance, expedite payments to merchants shortly after the sale, and customers make payments to the provider.
“It complicates checkout.” Modern tertiary financing platforms are built for speed. With integrated decision flows, most applications are completed in seconds, keeping the process simple for customers and staff alike.
The more retailers understand about tertiary financing, the more it becomes less of an unknown and more of a strategic advantage.
How to promote tertiary financing in your store
Once your tertiary financing partner is in place, promotion is key to maximizing its impact. Customers can’t use what they don’t know about, and your team can’t sell what they don’t understand.
Here’s how to make it part of your everyday sales strategy:
Train your staff to present financing as a benefit. Instead of treating tertiary options as a last resort, position them as one of several convenient ways to shop.
Market inclusivity in-store and online. Use signage, email campaigns, and product pages to highlight that your store offers financing for all credit types.
Leverage financing data to improve targeting. Over time, approval trends can help identify which customers are most likely to benefit from tertiary financing – allowing for more personalized marketing and improved conversion rates.
This proactive approach turns financing from an afterthought into a core part of your sales process.
Ultimately, tertiary financing for retailers isn’t just about filling in gaps – it’s about future-proofing your sales strategy and making your store more accessible to everyone who walks through the door.
Find out how Snap Finance can help your store reach more customers, reach more customers, close more sales, and increase overall sales performance today.
Interested in learning more? Download Snap Finance's 2025 Subprime Finance Study.
Snap-branded product offering includes retail installment contracts, bank installment loans, and lease-to-own financing. For more detailed information, please visit snapfinance.com/legal/products.