Today’s consumers have higher incomes, but rising inflation means tight liquidity for households. Central banks are raising interest rates to combat inflation, but that then diminishes purchasing power for traditionally financed big-ticket purchases, and mortgage rates are also rising, making homeownership more costly. Nevertheless, people still need to buy furniture, home appliances, tires, computers, and other necessities. With tight budgets, planning is essential but there is always the inevitable unexpected expense due to appliances that unexpectedly break down, tires damaged by road hazards, or the television that succumbs to a power surge.
Even when such items are covered by homeowner’s insurance, policyholders are afraid to file claims and affect their future rates. In any case, high deductibles of several hundred to a couple thousand dollars eliminate the benefit of filing claims for minor to moderate damages. CNBC reports that 40% of Americans would struggle to come up with 400 dollars for an unexpected expense.
Savvy customers are credit conscious
Many sophisticated consumers tend to use credit cards as charge cards, that is to say they try to pay their balances off every month and use the credit line and monthly payment option as an “emergency option.” In a worst-case scenario, these consumers can finance big-ticket purchases with traditional credit cards, but sophisticated consumers are wary about the costs of carrying high card balances, and don’t want to tie up credit lines that may be needed for emergencies.
In addition, credit savvy customers are wary about “hard pulls” or credit checks with the major credit bureaus that can significantly affect credit scores in a negative way.
There are attractive alternatives
“Buy Now, Pay Later” options such as Snap Finance are becoming more and more popular. Snap Finance empowers retailers to offer painless financing options that don’t rely solely on the credit bureaus when the customer applies for or receives financing. Snap Finance uses its own proprietary risk assessment that is flexible and friendlier to purchasers that may have a limited credit history or even past challenges.
One thing that is unique about Snap Finance is that it goes beyond purchase financing to serve as a marketing partner for retailers. Snap Finance’s EDGE marketing qualified leads program pairs merchants with preapproved customers who are ready to purchase.
For example, a purchaser may obtain approval for $5,000 while making a purchase that only costs $1,000. That means that the purchaser still has $4,000 of preapproved credit with Snap Finance. That customer, already able to make a purchase with the remaining credit without requalification, is then introduced to participating Snap retail partners based on factors such as customer needs or geography.
Snap Finance creates a win-win solution for customers and retailers alike, enabling customers to purchase what they need or desire, and enabling retailers to close 30-40% more big-ticket sales. Both traditional and online retailers can help their customers to check out with bigger baskets.
Snap Finance was established with the belief that financing should be painless and easy, and should be a win-win for both the consumer and the retailer. By partnering with Snap Finance, the retailer is seen as helping the consumer, by providing an attractive option for purchasing needed or desired big-ticket items.