What is Consumer Financing?

Consumer Financing is when a business offers financing to its customers. Offering consumer financing makes it possible for customers to purchase products or services they could not afford to pay upfront. Consumer financing is offered through merchants that are selling products or services.  

How to Offer Consumer Financing?

There is a wide range of consumer financing programs to choose from. Take our quick consumer financing questionnaire to see what solutions would fit best for your business. 

Why Offer Consumer Financing?

By creating an effective consumer financing program, you increase the odds of customers purchasing from your business, translating to increased traffic and sales to your business. Offering consumer financing also creates a reputation for your business as financially responsible and supportive of customers of all backgrounds.

Examples of Consumer Financing

In essence, consumer financing is providing customers with a line of credit they can use to purchase items. Store credit cards, car loans, and payment plans are all examples of consumer financing in action. 

Who can offer Consumer financing?

Small businesses, large corporations, banks, and third-party finance companies: all of these organizations can offer consumer financing in varying degrees to help build customer loyalty and trust while scaling your business to the next level of success. 

Who can Apply for Consumer Financing?

Generally, customers can apply for consumer financing by demonstrating financial stability and the eventual ability to pay back the original loan. 

Prime Consumer Financing: For Applicants with High FICO score and extensive credit history

Subprime Consumer financing: For Challenged Credit Applicants 

No Credit Check Financing Programs: For Applicants with Challenged Credit or No Credit History

Benefits of Offering Consumer Financing

Increase your customers buying power

Building a successful business is entirely contingent on the budgetary constraints of your customers. If your target audience is struggling financially, your business will struggle too. By widening your payment options, you make it easier for clients to purchase from you.

Help your customers build credit 

Consumer financing is an easy way for young consumers to build credit and establish consumers to improve their credit scores. Consumer credit lines are some of the easiest accounts to establish and regularly pay off, and that consistent activity has positive impacts on your bank account and credit score both short and long-term. 

Improved Customer Satisfaction and Retention

You also keep your clients happy by continually providing quality products and services at prices they can afford. Not only that, but you offer them financial benefits as well. Financing can improve the customer's cash flow by spreading out their payments over time. 

Improved Cash Flow to the Business (Only when using third party finance company)

Offering consumer financing allows the business to keep cash flow and income steady while moving inventory through at a regular pace. 

**unless the business is offering consumer finance internally, this would have a negative effect on cash flow. One of the benefits of using a third party consumer finance company is that the business offering financing is paid upfront.

Increased Conversion Ratios

Offering consumer financing options is excellent not only for your purchase conversion but also for your cash flow. 

Increased Average Order Amount

Your customers are likely to add more costly items and walk away with more purchases if you create and offer flexible payment options to support them. By offering consumer financing, your customer may purchase the higher priced model they could not previously afford.

Increase in Revenue

Offering your customers affordable monthly payment options will increase their purchasing power and increase your revenue.

Attract More Customers

Use financing as a marketing tool to set yourself apart from your competition. Set up special no-interest offers that help attract new customers

No matter how you choose to approach it, offering consumer financing is a major benefit to both companies and customers.

Disadvantages of Businesses Offering Consumer Financing Themselves

The below issues can be protected by hiring out your consumer financing to a third party and letting them assume the fiscal and legal risks.

Potential for Bad Debts

The first may feel like the most obvious, but it's still important to state: not every customer will pay up. It's an unfortunate but accurate reality that not every consumer is able to pay back every purchase they make. Whether it's because of a sudden change in financial circumstance or a longer-term issue with financial stability, some customers will all-too-confidently make a purchase and later realize they can't make their payment, and you might be left in the wind. Even if you do a thorough background check, bad debt can still sometimes escape your view.

Increased Risk

Offering consumer financing means you're assuming a certain risk that your customer may never pay you back, so you need to be prepared for every outcome and have a solid plan for how you'll pursue full payment in the event that your customer falters.

Cash Flow Constraints

On the other hand, offering consumer financing yourself can also adversely affect your cash flow if many customers begin purchasing on credit. Depending on how fast your plan requires repayment, you could be left empty-handed come rent time if your customers haven't been required to make payments yet. You'll also need to budget for the extra taxes and corporate loopholes you'll have to jump through in order to balance interest and repayment fees.


Problem with Setting up your own customer financing program

Offering consumer financing is relatively simple when you use a third-party provider. This is not the case when you are setting up your own internal consumer financing program.

Required Financial Know-how

Depending on your financial know-how, you may be able to handle the financing yourself. Running the consumer finance on your end involves being able to run background credit checks to ensure the financial stability and good credit of your customers, developing reasonable financing plans that include a fair yet profitable interest rate, and collecting and enforcing payment plans, not to mention the legal responsibilities that come with creating and adhering to any kind of financial contract.

Legal Responsibilities

If you're not already briefed on the legal responsibilities involved with working with consumer credit information, you'll definitely want to consult a lawyer or an expert in the field to make sure you're up to speed. Starting your own consumer financing bureau within your company can feel overwhelming, but you may find that you enjoy being able to personalize every aspect of the process.

Best way to Offer Customer Financing

For those who aren't ready to take on the responsibilities of personally running a consumer financing program but still want to offer it to your clients, working with a third-party financing provider is the perfect solution. By contracting with a firm or separate financial corporation that specializes in consumer credit and consumer financing, you gain the advantages of their years of personal experience and professional expertise and can offer that same confidence and opportunity to your clients.

Third-Party Providers take the burden off your shoulders

Working with a third-party provider takes much of the burden off your shoulders by transferring the responsibilities of initiating and creating consumer financing offers, maintaining credit records and background information, and collecting payment entirely to the firm, relieving you of pressure and legal repercussion in the event that any party has a problem.

Types of Consumer Finance Programs

Businesses can benefit from setting up a combination of the below programs to have offer solutions for all applicant types.  

Prime consumer financing programs 

These should be reserved for customers with excellent credit who can trust to repay you fully and quickly. Prime programs typically offer superior interest rates, decreased merchant fees, and are very low risk for both the lender and the purchaser. These financing options are great for repeat or preferred customers who have established themselves as loyal and financially stable patrons of your business.

Sub-prime consumer financing programs

The majority of your target audience will likely fall into the subprime category: clients with a good but not great credit history who still want to purchase items on credit. Sub-prime financing options should include a more thorough credit history review and stricter contact and repayment terms, but are still an excellent choice for businesses and will appeal to many consumers.

No Credit Check programs

Designed for people with extremely bad credit or for those who are just starting to build their credit, these are strict financing programs that offer small loans under careful repayment plans that still allow customers to purchase on credit. Though these financing options often have the highest interest rates, they're available to anyone regardless of credit history. They are a good way for your customers to rebuild credit history while still purchasing from your business. 

Medically Focused Consumer Financing Segments


  • Orthodontics
  • Dental Implants
  • Periodontal Surgery

Cosmetic Surgery

  • Breast Augmentation
  • Liposuction / Tummy Tuck
  • Implants
  • Rhinoplasty

MedSpa Treatments

  • Laser Hair/Vein treatment
  • Laser Tattoo Removal
  • Physician Assisted Skin Treatments
  • Body sculpting
  • Lasik Eye Surgery
  • Hair Restoration
  • Co-insurance
  • Bariatric Surgery
  • Fertility Treatments
  • Veterinary Services
  • Stem Cell Therapy Procedures
  • Insurance Deductible
  • Surgery Centers

Non Medical Consumer Financing Industry Verticals

Home Improvement

  • Patios/Decks
  • AC & Plumbing
  • Roofing
  • Outdoor Kitchens
  • Flooring
  • Landscaping


  • Consumer Goods
  • Integrated Shopping Carts
  • Credit Challenged

Automotive Repair 

  • General Auto Repairs
  • Auto Body
  • Wheels and Tires
  • Radiator/Muffler
  • Insurance Deductibles
  • Brake Repair


  • 2nd Look Program
  • Mattress Stores
  • Appliance Stores

High Risk

  • Vocational
  • Trade School
  • Club Memberships
  • Time Shares
  • Jewelry
  • Cell Phones
  • Treatment Centers
  • Business Opportunities

Catering and Event Related

  • Event Rental Companies
  • Wedding Planners
  • Catering Companies
  • DJs
  • Photographers and Videographers
  • Mobile Entertainment

Ready to find out more?

Lets Schedule a Call to Discuss our Programs