Retail Finance Options
3 min
There are various retail finance options available to merchants – but how do you know which is the right one for your business?
Interest free finance
One of the most popular retail finance options is interest free finance. This allows customers to spread the cost of a purchase over time – without paying any additional interest or fees.
Obviously, this is an appealing option for your customers – but it’s important to be aware of the facts around offering interest free retail finance. Lenders always charge a fee per transaction. This is normally paid by the customer with interest bearing options, but with interest free finance, the merchant takes on this cost. So, if you’re looking at interest free finance, find out how much you’ll be charged per transaction.
Another thing to check with interest free retail finance options is whether your customers will be charged any additional fees or interest if they are late with repayments or don’t clear the balance before the interest free period expires. At Zopa, we don’t charge late or hidden fees and this is clearly communicated to customers throughout their journey with us – so be sure any provider you choose does the same.
Interest bearing finance
Finance providers charge a fee for each lending transaction. With interest bearing finance, these charges come in the form of APR – which the customer pays.
Obviously, lower interest rates can attract more customers and make the credit option more appealing. However, this will impact your profit margins. Similarly, customers looking for interest–bearing options will consider APR, so be sure to check these facts.
Which one is right for my business?
Typically, interest free options work well for smaller-ticket items, while being able to spread the cost of higher order values over longer periods of time fits well with interest bearing credit options.
Ultimately, retail finance options need to be part of your business strategy, as opposed to simply an extra payment option at checkout. Work with a provider like Zopa who takes a partnership approach to your retail finance solution, and can help you craft the perfect offer for your sales goals.