The benefits of lease-to-own financing
Lease-to-own financing can have a significant impact on your bottom line. It can turn missed opportunities into closed sales and dissatisfied shoppers into loyal customers. Here are three powerful ways lease-to-own financing could give your tire business a boost:
1. Broaden your clientele
A recent report from Oliver Wyman found that 28 million adult Americans are credit invisible, and 57 million have subprime or below credit scores. That’s a total of 85 million people who could benefit from an alternative financing solution. By providing lease-to-own financing in your store, you can give those who have poor credit, little to no credit, or who don’t want to rely on credit cards a chance to get the tires they need when they need them.
To qualify for lease-to-own, the applicant typically has their credit report pulled from special providers and not from the three major credit bureaus (Experian, TransUnion and Equifax). Additional data, such as monthly income and having an active checking account, is also looked at, increasing the likelihood of approval. This allows you to reach a significant customer segment who want your product but can’t afford to pay for it in a single transaction.
2. Improve average order value
Lease-to-own financing gives customers the power to make purchases that otherwise would not fit their budget while offering a repayment schedule that coincides with their paydays. When your customers no longer have to pay for everything in one lump sum, it could motivate them to go for a higher ticket item or to add on additional items. This means more closed sales at higher amounts — a win-win for your business.
3. Drive repeat customers
In addition to bringing in new customers and more sales at higher amounts, offering a lease-to-own financing option in your store can also drive repeat business, according to a study done by the Federal Reserve Bank of Kansas City. Lease-to-own empowers your customers financially and creates an opportunity for them to afford big ticket items. Your shoppers will no longer feel limited to buying used tires or putting off purchasing altogether. This can go a long way in increasing customer loyalty and retention. A lease-to-own company like Snap Finance even markets directly to your customers through their Snap EDGE program, encouraging them to come back to your store for more.