Why are so many businesses offering financing to customers?
Key takeaways:
Customer budgets and shopping habits are changing, making payment options increasingly important for high-ticket purchases.
Offering access to financing may help businesses reach more shoppers, address upfront-cost concerns, and provide another reason to choose their business.
Financing works best when options are clearly communicated, easy to access, and supported by the right financing partner.
Businesses should consider customer fit, application experience, merchant support, and transparency when choosing a financing provider.
Major purchases rarely arrive at the perfect time. A refrigerator may stop working. A vehicle may suddenly need new tires. A mattress or piece of furniture may need replacement before a customer has saved enough to cover the entire cost upfront.
Customers in these situations may still be motivated to shop, but the upfront price can create a barrier.
Traditional credit also may not meet every customer's needs. Snap Finance research found that 78% of consumers with lower credit scores have been turned down for financing. Among consumers with credit scores below 670, 61% said having financing available for all credit types was an important consideration when deciding where to shop for a major purchase.
Providing access to another pay-over-time path may help businesses serve shoppers who otherwise have fewer choices. Lease-to-own financing, for example, is not a loan or credit. With Snap Finance's lease-to-own financing, Snap purchases eligible merchandise from the retailer and leases it to the customer. The customer makes payments according to the lease agreement and obtains ownership after completing its terms.
For a shopper who needs an essential item but cannot or does not want to cover the entire price in one payment, that additional option can matter.
How can customer financing help businesses reach more shoppers?
Why offer customer financing if your business already accepts cash and major credit cards? Because those payment methods may not work well for every customer.
Making additional financing available may broaden the group of shoppers your business can serve. That can include customers with limited credit histories, past credit challenges, or other circumstances that make traditional financing more difficult to obtain.
Financing may also help attract customers who begin their shopping journey by looking for a way to pay over time. A shopper searching for a furniture store, tire dealer, appliance retailer, or other business may compare payment options before deciding which location or website to visit.
The customer experience matters after the first transaction, too. Clear information, a straightforward application, and responsive support may contribute to a better overall experience. While financing does not guarantee repeat business, a positive experience can give customers another reason to consider your business the next time they need something.
Customer financing 101: How to offer financing to customers
Can financing support sales without relying on more discounts?
Price matters, but lowering the price is not the only way to address customer hesitation. When a customer wants a product but hesitates because of the upfront cost, financing gives the business another conversation to have. Instead of immediately discounting merchandise, the business can explain the available ways to pay.
That distinction can become especially important for independent and growing businesses. Larger competitors may have more purchasing power and greater ability to compete aggressively on price. Smaller businesses often need other ways to differentiate themselves.
Lease-to-own financing may provide one of those options.
When approved shoppers have a way to pay over time, they may be able to select the merchandise or combination of eligible products that better addresses their needs, subject to their approval amount and applicable terms. A customer replacing a bedroom set, for example, may be able to consider the complete solution rather than choosing solely according to what can be paid for upfront that day.
Financing, including lease-to-own financing, does not guarantee a completed transaction or a larger purchase. It simply gives customers another option when upfront cost might otherwise keep them from moving forward.
That can help businesses compete on payment choice, customer service, product expertise, and overall experience instead of relying only on discounts.
Why isn't simply offering financing enough?
Adding financing does not automatically change customer behavior. Customers first need to know that financing is available. If a business buries the information at checkout, keeps signage behind the counter, or relies on shoppers to ask about payment options, many customers may never discover them.
Consumers learn about financing through multiple touchpoints, including employees, business websites, and in-store signage. That makes consistent visibility important throughout the shopping journey.
Businesses can make financing more visible in several places to introduce the option before upfront cost becomes an obstacle:
On the website: Mention available financing on relevant category and product detail pages instead of waiting until checkout.
In the store: Use approved point-of-purchase materials where customers make product and price comparisons.
During customer conversations: Train employees to introduce financing consistently and explain where customers can learn more.
At checkout: Make the next steps clear for customers who decide they want to apply.
The process after that introduction matters just as much.
A confusing application, unclear handoff, or employee who does not know what happens next can interrupt the customer experience. Business owners should also understand what happens behind the scenes, including transaction processes, funding, reporting, and merchant support.
Finally, businesses need to measure whether customers actually use the program. Application activity, completed transactions, utilization, and other relevant metrics can help owners understand how financing fits into their broader sales strategy.
What should business owners look for in a financing partner?
Choosing a financing provider involves more than comparing approval rates. A provider's technology, support, processes, customer experience, and compliance resources can all affect how well the program fits into daily operations.
What makes a good retail financing partner (beyond the approval rate)
Before choosing a provider, business owners should evaluate several areas.
Customer fit: Does the provider offer financing products that align with your customers, merchandise, and business model?
Application experience: Can customers understand the process and apply conveniently through the channels your business uses?
Operational processes: How does the provider handle transactions, merchant funding, cancellations, returns, and other common situations?
Merchant support: Can your team reach knowledgeable support when questions or transaction issues arise?
Training and marketing resources: Does the provider help employees understand the program and provide approved materials for promoting it?
Reporting: Can owners and managers see the information they need to understand applications, transactions, and program activity?
Transparency and compliance: Does the provider clearly explain its products and give the business appropriate resources for presenting financing accurately?
These factors help turn financing from a feature your business technically has into a payment option customers and employees can actually understand and use.
Make financing part of your customer access strategy
When businesses make the right payment options visible and pair them with clear processes, financing can become part of a broader customer-access and growth strategy. Snap Finance works with businesses across categories such as furniture, mattresses, appliances, electronics, tires, wheels, and more, providing tools and resources to help participating merchants offer customers another way to pay over time.
See how Snap Finance can help your business offer more ways to pay
Snap Finance, its affiliates, and partners offer consumers a range of solutions, which may include lease-to-own financing, installment loans, retail installment contracts, and credit cards. Product availability may vary. For detailed information, visit snapfinance.com/legal/products