Vehicles last longer than ever. The most recent study conducted by IHS Markit in 2021 indicates that the average age of a personal vehicle in the United States is now 12.1 years. In 2002, it was 9.6 years old. And while the Federal Highway Administration reports that the average number of miles driven in the United States is 14,263 per year, it’s safe to assume that there are plenty of vehicles out there with nearly 200,000 miles on the odometer.
Vehicles become more expensive to buy, but potentially even more expensive to maintain, but last longer. Research has shown that Americans cannot afford a $500 surprise car-related expense easily. They need to have access to simple, fast and practical financing solutions.
While many consumers in the United States use credit cards to pay for day-to-day expenses, they need this revolving credit to have the most spending flexibility possible. Since the average credit card balance, according to Bank Rate, is $5,525, most consumers are open and appreciate additional financing solutions as well.
For today’s merchants and service providers, it is imperative to explore alternative financing solutions. With alternative financing solutions, products can be rented, that is, rented to a customer. At the end of the term, ownership passes to that customer. The operation of this option is simple. A consumer in need of auto repair or tire replacement is approved for terms of alternative financing solutions. (Although these applications are approved at a higher rate than credit applications, it can mean the difference between a sale made or a sale lost or a satisfied customer or a dissatisfied customer.) The overall repair cost and terms are included and the consumer is presented with a monthly payment amount that can be automatically deducted from their bank account. Payments are aligned with the person’s payday, so the process becomes as easy as possible when it comes to remembering when to pay or if there will be money in the account at the time of payment. withdrawal.
Another major advantage of alternative financing solutions is that the consumer will not have to wait to save for repairs, which could accelerate damage caused by wear and tear on the vehicle. Additionally, delayed parts and service can put the driver and other passengers in dangerous situations, such as with bald tires or broken suspension parts. Alternative financing solutions provide peace of mind by allowing repairs to be made today with manageable and quick payment solutions, without having to take up space on high interest credit cards.
For store owners, this is an important offering that can generate more revenue with better gross profit margins. Instead of removing needed services from a quote or playing the discount game, the store can provide customers with an easy and reliable payment method that won’t break customers’ bank. Additionally, the store owner does not have to worry about their customer defaulting on payment, as alternative financing solutions create an agreement between the consumer and the financing provider. Traders are funded quickly. For the consumer, payments are set up for automatic withdrawal and aligned with the customer’s payday. For the merchant or store owner, the fees can be similar (or lower) than credit cards, so the store owner gets a happy customer and gets the job done today with the appropriate gross margin needed.
Consumer needs are changing. Just a few years ago, the idea of more than four tiers of tire brands was unthinkable. Over the coming year, the Federal Reserve will raise interest rates at an unprecedented rate, making traditional credits or cash loans much more expensive. Today’s customer not only wants flexible options in the services and tires they buy, but also in how they pay for them.
Alternative financing solutions are an attractive option for many consumers and a growing number of merchants. And it’s one of the fastest growing financing segments. Dealerships and repair shops need to ensure they remove barriers to the consumer’s ability to find affordable and flexible payment options – helping them get to work, drop their kids off at workouts and to move reliably in the city. The store that can help them make the right decision given their situation will be the store that will bring them repeat customers. With all of this in mind, it’s essential to explore alternative financing solutions, beyond cash and credit cards – allowing you to close every customer that comes through the door.
For more information, visit www.snapfinance.com