Is No Credit Check Financing Good for a Merchant?
No credit check financing is fairly new on the scene. In 2004 congress passed the Check 21 law, this law allows for paper checks to be converted into electronic debits, which are considered “financial instruments”. Now a merchant can allow a customer to post date checks, and a “Check Guaranteeing” service will process the checks through their system, and on the dates of the checks transfer the money from the customer to the merchant.
Using routing and bank account numbers from the customers check, these services can check the customers check writing history and clear them for the purchase. This guarantees the merchant that they will be paid, and the customer gets his products or services.
I sell 90 day no credit check financing, so I am a little biased. But I think it is a great way for people who are credit poor, but have jobs and a good check writing history to get the products and services they need. Although it is just like any other form of credit, and can be abused. I wouldn’t buy totally frivolous things using it, but if you need your car repaired and don’t have the money or credit, it can be a real life saver. Imagine a young couple who only had one car to get to work with and it needed a six hundred dollar repair job. If you were the mechanic and you had to turn them away, how would you feel. but what if you could offer them a solution, and let them pay for the repair over a 90 day period, with no risk to you. You would feel pretty good.
For merchants this product is not something to replace your current credit card or cash business. These are customers who are not shopping with you because they don’t have the cash or credit. They still need products and services, and can be a great source of new customers.
If you use this service, you must make sure you train your staff to utilize it. If a customer comes in and asks ” how much is that” and goes to walk away, your sales staff should make sure they know that if they have a job and a good check writing history they can purchase the products or service they need.
If you have commissioned sales staff they will like 90 no credit check financing, because it will help them to close more sales, and they will make more money.
With the tough economic times we have gone through and are still going through, this is a great tool to add to your list of things to help sell your products or services. I have talked to merchants who told me that 90 day no credit check financing has helped them during the slow months, when sales were off, but the money still came in from sales ran through the no credit check program in previous months.