In this blog, we have discussed in-house financing more closely. So, if you have little to no understanding about it, you are in the right place now.
What Is In-House Financing?
In-house financing is a type of financing in which an organization provides its customers with loans. This eventually helps an organization to buy its goods and services.
In-house financing also cuts down a company’s dependence on certain financial sectors to provide its customers with funds.
A Clearer Picture of In-House Financing
In-house financing is typically provided by various retailers to ease and facilitate the purchasing process for customers. It is worth noting that a retailer should have an established lending business within the firm or partner with a third-party credit provider to provide a loan to his or her customers.
In-house financing reaps a lot of benefits to consumers as they can even acquire a loan from a firm where they once failed to.
The Automobile Industry & In-House Financing
The automobile sales industry is one of the most prominent users of in-house financing. Because it’s business mainly depends on buyers who take auto loans to close the purchase of vehicles. If a company offers in-house financing to a car buyer, then they will be able to complete more deals by getting more such customers.
When it comes to underwriting, automobile dealers usually have the advantage to set their own standards. Most of the time, this indeed encompasses a large number of borrowers by allowing for low credit score acceptance.
And in numerous cases, all these lending platforms also accept borrowers who have been turned down by various banks or financial intermediaries for a loan.
Furthermore, there are numerous industries that offer in-house financings such as equipment manufacturers, e-commerce retail stores and appliance stores.
Ford Credit is one of the most popular in-house auto financing groups. In the year 2017, it partnered with a company named AutoFi for making car purchasing and financing more efficient and easy with the help of technology. The main motive of this partnership was to allow every buyer to conveniently shop online for both car & auto loans.
It was altogether a brand new platform that allowed Ford customers to shop online via Ford dealer websites. They were able to purchase as well as finance their car in just a few clicks.
In a nutshell, this type of customer experience not just helps a car buyer to save a large chunk of time at the dealership but also provides a fast sales process for Ford.
In-House Financing & Technology
With the increasing number of new financial technology organizations, the majority of the borrowers today have a long list of in-house financing options. They truly have faster as well as more convenient point-of-sale credit platforms.
A point-of-sale credit technology can be created around an organization’s in-house credit department or normally facilitated if an organization partners with a single credit provider to fulfill the lending requirements of its customers.
For instance, a fintech organization, Affirm is one of the well-known point-of-sale platforms. It partners with hundreds and thousands of retailers mainly for immediate financing.
Needless to mention, point-of-sale financing truly simplifies the whole lending process for a customer as it allows him or her to apply for credit whenever he or she is ready to purchase.
Furthermore, it makes credit easy for customers as they can acquire a credit update directly from the retailer in just a few minutes. Plus, point-of-sale financing also allows a retailer to close a deal. According to reports, firms that relied on point of sale financing options had a sales growth of 32 percent.
Benefits of In-House Financing
So, here are the three biggest benefits of in-housing financing:
- Convenient Purchasing Process– You will not have to spend hours or days to get your loan approved. In-house financing makes sure a faster process with various additional benefits.
- Easy To Apply– In-house financing is flexible when it comes to approval. No matter what is your credit score, you can avail a loan with zero challenges.
- Builds Credit– Through in-house financing, you can improve your credit score in just one month after buying a vehicle. And you know the benefits of a good credit score!!
Now that you know everything about in-house financing, you will also agree that in-house financing is likely to witness a boom in the coming days, expanding both nationally and globally.