Lending can be a tricky business, as seen by the financial crisis a few years back. When a bank looks to make money off of the terms of the loan, the borrower becomes the target of the lending practice. Consumer financing, on the other hand, is a type of lending that benefits both the buyer and the business offering the financing option. As a retailer, you’re able to collect the full amount from a third party lender while still allowing the customer to pay in small increments. The customer then makes payments to the lending company, often without having to pay any interest for the first several months.

Many shoppers can’t afford to make purchases unless there’s a financing option. While $1,000 is too much for some to spend in one month, $85 a month over the course of a year is much more manageable. With consumer financing, a retailer can offer these split payments without taking on the added responsibility of collecting on a monthly basis. The seller is able to extend the offer of credit to the customer, but a third party lender is actually responsible for supplying the money. The client doesn’t have to overspend and you don’t have to watch your cash flow come to a grinding halt.

This is all made possible by lenders who are happy to put forward small amounts of money in exchange for a little bit of advertising. Their name or logo will be on a form or credit card offered by the retail company, and beyond that they are in charge of collections. Many companies don’t charge the merchant any sort of fee, meaning the only money they will take in is if the consumer defaults on the loan or doesn’t pay in full before the end of the promotional period.

Some lenders will even add incentives to help the retail company, such as zero APR on all purchases over $500. This is helpful for both the buyer and the seller, as a customer can avoid paying anything extra in interest and the merchant can sell extra inventory to consumers looking to get their total above the set minimum. The lender still pays the merchant the full amount of the purchase within a few days of the transaction, so these incentives can be great for business

Any time a customer can feel like he or she is saving money while still paying full price for a product, everyone wins. With consumer financing, that’s exactly what happens.