Monthly Archive: June 2016

What You Need To Know About Consumer Financing

Consumer-Finance-2These days some businesses have introduced a new system of giving credit options for the clients, this is done as a measure to increase the revenue as well as their customer base. Business terminology defines this system as consumer financing. This arrangement is usually made between any financial institution or a bank and its clients for extending the credit of its customers. This also means that, a proper documentation is done with the signature (shows the consent of the client) which mentions that she/he has agreed to the terms and conditions specified by the financial institution and is ready to repay the specified amount. Before making the pledge, it is essential to fully understand the details of the agreement.
It is seen that those businesses that provide consumer finance programs have more benefits than those who do not have such schemes. It is primarily because this helps in making the business stand out from the other competitors, and would naturally help in attracting more leads from customers. The existing consumers too would be more than happy to continue as their status would also be upgraded. This added sales as well as consumer retention would boost the business.

This scheme is also called as promotional credit, since its primary purpose is to help the business thrive by attracting people into purchasing their goods. It is often employed as a marketing strategy by the business which is bound to give great results. Studies showed that sales could even increase up to 70%. In some cases, the business might even give credit to its customers at 0% interest, but mostly this is given only for a short duration of time. Also keep in mind that, all these are completely dependent on individual businesses within each industry and cannot be compared with each other.
If you want to boost your sales, then it would be a good idea to incorporate credit option from the beginning of the sales. This is a great method to increase your sales approval just within two or three months. All that you need to do is ensure that the customers are attracted to the right kind of credit financing which would motivate him/her to buy more products.
It is easier to retain the existing customers than to create new customers. The already existing customers might already be acquainted to the policies, price range and kind of products offered by the store. This also reduces your effort in marketing your business, so all that is actually required is to continue and improve their loyalty towards your store. This could be done through proper credit financing strategies. You could be sure of it improving if the consumer comes back to the store for more purchases. This also means an increase in revenue too, as with credit facilities you could be sure of getting new customers too.

However, if the business does not have a credit system in place from the beginning. Then it could be initiated through various ways. Such as monthly payment option or creative marketing strategies.

Credit Counseling Process Explained

credit counselling

Credit counseling is defined as ‘a process that is used to help with debt settlement through budgeting, education and use of various tools where the goal is to reduce & eliminate debt’. In few countries, it’s an obligatory process before anyone filing for bankruptcy. There are different regulations in different countries for this. Some counseling agencies are non-profit, while some companies charge very large amount of money as fees. is the best destination to seek advice on credit counseling.

There are three steps in credit counseling. The first step is to assess the existing health status of the credit. The second step would be to draw a plan that is personalized on a resolution which also helps to improve the credit score. The final step would be to execute the plan, to evaluate it on a regular basis. Credit counselor’s first task would be to understand debtor’s financial situation. Therefore, it is imperative that there shouldn’t be any hidden facts among the counselor and debtor. In many cases, there are collective loan defaults, low credit values and zero sources of income. At such times, it is the job of the counselor to make the debtor understand the scenario and to give confidence.

The next step of the counselor must be to make a plan to settle, negotiate and repay the debt. The counselor may also negotiate with the creditors upon the debtor’s authorization. They could try and waiver the interest amount or could negotiate for an extension of duration. The counselor could also give some suggestions for the debtor on the rules, management techniques and regulations so that they can be cautious in future.

The final task of the counselor would be to make a Debt Management Plan- DMP for the debtor. In this plan, the debtor hands over the financial responsibilities to their counseling agency and pay money to them, this in turn is distributed to the lenders by the agency. While this might be an easy way, this plan costs a huge amount of money and also involves sharing personal details with the agency.

The credit score will not be affected by the counseling session itself; but, taking up DMP might have a negative effect on the credit score in a short run. This is because DMP involves closing debt accounts one by one, or a partial payment might negatively affect the credit score. Finally, if at some point they stop paying on the debtor’s behalf, it might damage the credit history even more. But on the other hand, a debtor requiring DMP means that his/her credit score is already very bad; so DMP might close all debts after a long run helps closing bad debts, providing a fresh start.

Credit counseling is very important if there is massive debt and the debtor does not have sufficient sources of income to close all the debts. Selecting the counseling agency carefully is also imperative. Agencies that have a good reputation and authorization must be selected. Some agencies demand a large sum of money or personal details; such agencies should be avoided.