POS financing: myths vs. reality
As a business owner, you’re always striving to give your clients a better experience. Offering point-of-sale (POS) financing gives them a flexible payment option , and it has the potential to, in turn, increase your sales and revenue.
You may have heard some common misconceptions about POS loans and how they work. In simple terms, POS financing allows qualified buyers to pay for a purchase over time, functioning as a personal loan for a specific purpose.
If you’re not yet offering POS loans for your customers, you may have heard some common misconceptions about this financing option. Don’t let these persistent myths get in the way of providing your clients with the payment options they need.
1. My clients don’t need financing, or my clients would rather pay cash or with a credit card.
As the saying goes: You don’t know what you don’t know. When it comes to finances, it’s especially important to not assume. While you might think they don’t need financing, how much do you actually know about their big-picture financial situation and overall goals? They may choose to pay with cash, check or credit card simply because it’s their only choice.
By proactively offering financing, you’ll give customers the option if they need it. As an added customer service benefit, offering financing choices upfront can help ease any potential sticker shock over the price of your product or service.
2. Offering my clients a loan adds unnecessary time and paperwork to the process.
Yes, there is paperwork involved, but giving your clients financing options doesn’t have to be complicated or burdensome. Instead, look at POS loans as an easy value-add for them. With a simple prequalification and digital application processes that can be completed by clients on their own or with your consultation, your customers can get approved and apply for their loan in just minutes.
3. Point-of-sale loans will leave my client with overwhelming debt.
In reality, transparent financing gives clients the ability to choose the term and monthly payment amount that best fits their budget and individual needs. What’s more, they can pre-qualify with no impact on their credit score. No hidden fees and no retroactive interest make the whole process as painless as possible. As long as they’re able to make regular payments on time, there’s no reason a POS loan would negatively impact their finances.
4. Point-of-sale loans will require clients to get a new credit card.
Concerned your clients will be wary about opening another line of credit? Point-of-sale loans can be taken out for one or several products and services with a specific provider, keeping those new lines of credit to a minimum.
5. I should avoid offering financing to my clients because it will be uncomfortable if they’re not approved.
This is an understandable fear, but also unlikely. The majority of Americans have a good FICO credit rating or better. So, the odds are in their favor when it comes to the likelihood of approval.
Ally Lending also offers payment solutions for a range of credit profiles. With digital application processes, clients can quickly see if they are pre-approved on their own devices, eliminating the possibility of an awkward interaction.
The truth about POS financing
Now that you have the facts on POS loans, you can make an informed decision about whether this financing option is the right choice for your business. Consider how they can help your customers and potentially improve your bottom line. Making sure your clients are able to pay on time and in a way that meets their financial needs is a win-win for everyone.
As an Ally Lending provider your customers can apply, and finalize their financing in a matter of minutes.
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