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Enhance Customer Experience with Non-Prime Financing

May 16, 2024


3 min read

The Non-Prime Financing Imperative

A staggering 47% of U.S. consumers fall into the non-prime category, which means they are often not eligible for traditional point-of-sale financing loans, such as store or private label cards1. Non-prime financing, which includes secondary loans and lease-to-own plans, extends a lifeline to consumers with below prime credit scores or no credit history. In fact, up to two-thirds of these consumers would not have made a higher-ticket purchase without non-prime financing2.

At a time when financial inclusivity is becoming increasingly important, non-prime financing emerges as a tool retailers can adopt to foster a more inclusive shopping environment and play a critical role in meeting their customers' needs. Here are the top four ways that non-prime financing can enhance customer experience, enabling retailers to build lasting relationships with a sizable consumer segment.

How Non-Prime Financing Elevates Customer Experience
  • Demonstrate empathy: Credit scores only reflect a limited snapshot in time. In many cases, scores are temporarily lowered due to a lack of access to credit, a recent hardship, or heavy financial burdens such as student loan debt. During those challenging times, customers remember the businesses that supported them. 78% of global consumers say they will be more loyal to companies that help them through difficult times3. Offering non-prime financing options shows those customers that they are welcome at your business and you want to support them.

  • Personalize their experience: In an age where personalization is paramount, 73% of consumers expect companies to cater to their unique needs and expectations4. Non-prime financing offers customers the tailored solutions they expect—solutions that fit their current financial situation and adapt as their circumstances change. A one-size-fits-all-all financing program leaves opportunity on the table and may send a message to your customers that you don’t fully understand their needs.

  • Make it easy: Consumers prioritize convenience and are looking for seamless, low-friction ways to pay over time. Omnichannel non-prime financing options are available so that customers can shop with financing in-store and online. Technology integrations with “prequalification” offers allow an applicant to enter information once and automatically flow from the primary financing application down to a secondary loan or lease-to-own application. Customers can quickly get an eligibility decision with minimal extra steps through prequalification.

  • Establish trust through transparency: Transparency is important to consumers, and Gen-Z consumers in particular value transparency from the businesses with which they interact. Look for financing plans, such as Koalafi’s lease-to-own plans that do not have gotchas, confusing fine print, or hidden fees. This clear approach, with no confusing fine print, resonates with consumers and helps to build trust. Here’s more information about what a transparent financing program looks like.

In an environment where customers have many options and high expectations, non-prime financing can be a key tool for merchants. With the right non-prime financing partners and options, retailers will show their customers they prioritize inclusivity, empathy, personalization, convenience, and transparency, resulting in a loyal customer base that drives sustainable growth.

1Consumer Credit Card Market Report, Bureau of Consumer Financing Protection, 2021

2Based on Koalafi survey, 2022.

3What matters to today’s consumer, Capgemini Research Institute, Dec 2022

4State of the Connected Customer Report, Salesforce, May 2022

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Koalafi offers Lease-To-Own and Lending solutions. Loans issued by The Bank of Missouri, serviced by Koalafi