24 minute read
A review of no-creditneeded payment programs
from Modern Tire Dealer - March 2019
by EndeavorBusinessMedia-VehicleRepairGroup
No-Credit-Needed Options A REVIEW OF NO-CREDIT-NEEDED PAYMENT PROGRAMS
ALTERNATIVES TO TRADITIONAL FINANCING CAN HELP DEALERS CAPTURE MORE SALES
By Ann Neal
Consumers expect to see a variety of payment options available wherever they shop, and their local tire store is no exception. One way to open up a tire store to more tire buyers is to offer affordable monthly payment plans that do not rely solely on a credit score for approval.
To enable more customers to buy their tires, more than a third of the independent tire dealers who responded to a Modern Tire Dealer survey offer no-credit-needed payment plans in which consumers lease tires with the option to purchase them in the future.
Nearly two-thirds of the MTD survey respondents who offer lease-purchase programs say the programs have a positive impact on their business levels.
A further breakdown reveals 38% of survey respondents offer no-credit-needed payment programs to their customers. Of those, 47% said “very positive” and “19%” said “extremely positive” described their results with the tire purchase programs.
Purchases such as tires can be challenging for consumers without traditional credit and the cash to pay upfront.
In other cases, consumers may have access to credit but may not wish to increase their credit card balance or add another card to their wallet. Lease-to-own (LTO) agreements give tire dealers the ability to offer a payment option that meets the needs of these consumers.
Instead of looking at traditional credit histories, the companies providing leasepurchase programs consider repayment history for recurring bills such as car insurance, utilities, rent and cell phone service. Modern Tire Dealer asked several companies that offer no-credit-needed LTO programs to tire retailers for details on their programs. They are: Acima LLC, Kornerstone Credit LLC, Prog Leasing LLC (Progressive Leasing), Snap Finance LLC and West Creek Financial Inc.
Thirty-five percent of people in America do not qualify for traditional financing based on their FICO scores, according to Ryan Slobodian, vice president of Snap. “They are looking for somebody who is going to help them. These are people who are driving by, and you have the option to draw them into your tire store.”
The key is to promote the availability of alternative payment plans for tire purchases. “You have to do some messaging on your side,” says Slobodian. “Many of our partners hang one of our banners out on the street. They’re shocked at the number of people who see that nocredit-needed messaging and come in the door. We all know our credit scores. People aren’t going into a shop where they’ve been denied for prime financing previously. But if you invite them in with that no-credit-needed messaging, it’s a way to increase that traffic flow.”
Snap recently added the option to apply for an LTO purchase plan via text message on a mobile device. “It’s all about getting outside the walls of the shop and engaging the consumer in different places where they may be,” says Slobodian.
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PROVIDERS OF LOANS AND CREDIT American First Finance Inc. (AFF) offers both LTO programs as well as installment loan programs which do not require a traditional credit history for approval. Another provider of financing to credit-challenged consumers is EasyPay Inc., known in the market as EasyPay Finance. The company says it provides tire dealers with a non-lease credit solution for customers with good credit to no credit. The following overview also includes responses from a company that relies on credit scores for approvals, Synchrony LLC, which does business as Synchrony Financial. Synchrony provides manufacturer branded and privately branded credit cards, which are typically awarded to consumers with good, or prime, credit.
MTD begins with a Q&A in which Acima, Kornerstone Credit, Progressive
Leasing, Snap Finance and West Creek Financial explain how their offerings benefit a tire store, as well as their process for approving a customer for an LTO agreement. The responses from American First Finance, EasyPay Finance and Synchrony are presented separately.
In addition, areas to consider when evaluating candidates who want to provide lease-purchase payment options to your business are presented in charts throughout this overview. The charts show answers from the five LTO providers featured in the article: Acima, Kornerstone, Progressive, Snap and West Creek.
MTD: What services and products
do you offer tire dealers?
Acima: Acima offers a no-credit-needed financing solution that tire dealers can offer to their potential customers at the
point of sale. Acima’s product is 100% webbased and paperless, which equals quick turnaround from application to funding. Acima employs the largest nationwide outside sales force in the industry, which provides in-person enrollment, training, and ongoing support to its dealer partners.
Kornerstone Credit: We provide flexible, no-credit-needed financing for tires and parts.
Progressive: Progressive Leasing offers virtual lease-to-own services to tire and wheel dealers. Virtual lease-to-own is a flexible alternative to traditional credit that allows customers with less-than-perfect credit to obtain the tires and wheels they need to travel the roads safely.
With a Progressive lease, we purchase the merchandise the customer selects from the retailer. Then, the customer signs an agreement to lease that merchandise from Progressive. Progressive owns the merchandise, but the customer can take ownership after making all required lease payments or through an early buyout option.
While there is a cost associated with Progressive’s leasing services, we don’t charge interest.
Our customers may cancel the lease at any time without penalty and, if current on all payments, without any further payment obligation.
Snap: Snap offers financial products for credit-challenged consumers, allowing tire dealers to take credit declines from their primary lenders and turn those into approvals.
West Creek: We offer high-approval financing for consumers who don’t qualify for traditional financing. Our product
offers a 100-day payment option, 12- or 24-month finance options, $500 to $5,000 credit lines, and early buyout options after the first 100 days, before the full term.
MTD: How do your offerings benefit
a tire dealer?
Acima: Acima saves potentially lost customers, increases average invoices, and helps attract a whole new customer. Because Acima does not rely on a credit score when making an underwriting decision, approval rates are far higher than traditional credit offerings.
In short, Acima helps a dealer compete for the 40% of Americans who cannot qualify for traditional financing. While traditional, or prime credit offerings are still key to any dealer’s success, Acima offers the perfect complement — rounding out the dealer’s financing portfolio and allowing them to offer a financing solution to a far wider range of customers.
Kornerstone Credit: We help increase sales up to 33% by qualifying customers who may not want to use credit or have insufficient credit to qualify for traditional financing.
Progressive: More than one-third of U.S. consumers have subprime credit. This often leads these consumers to delay or even avoid big purchases.
Many would-be tire customers might put off replacing their tires or walk out of tire shops disappointed and empty-handed
after being denied credit. Progressive Leasing provides these consumers with an affordable alternative to credit, helping them purchase the tires and wheels they need to travel the roads safely while solving a big problem for tire dealers — the problem of lost sales. Snap: Tire dealers are always looking for new customers. Snap Finance brings in new customers. These individuals didn’t previously buy in their establishment because there wasn’t a finance product that worked for them. West Creek: Our leasing options give retailers access to consumers who do not qualify for traditional credit. If a dealer only offers a Tier 1 credit card product, then Questions to ask when choosing LTO payment plan providers
Length of time to qualify for your program? Acima Less than 48 hours from the time you have submitted the required enrollment documents to us. Kornerstone A tire dealer partner can be signed up in less than 24 hours.
Dealer transaction fees? The standard merchant discount is 0%. We let our partners choose what works best for their business model. Ask your account manager about our options. Progressive In most cases we can qualify a tire dealer within one business day after we receive the necessary documentation.
Progressive Leasing does not charge any dealer transaction fees. We offer our virtual lease-to-own services at no cost to the dealers. Snap Dealers can sign up within minutes and immediately begin doing business. In addition, Snap will assign a client success manager to assist in on-site training and with ongoing support.
Fees are negotiated individually based on a number of factors but are similar to credit card interchange rates. West Creek Our process takes 10 minutes for a dealer to apply, and account setup is 24 hours or less.
We can customize our program to the dealer’s needs.
Technology required by the dealer? Any internetconnected device from smartphones to desktops. An internet or mobile connection. Our technology works seamlessly through an internetbased mobile application. A customer can text to apply using a tire dealer partner’s unique mobile application link. No technology is required of our dealer partners. Progressive Leasing offers fully hosted solutions for retailers with limited technical infrastructure, while investing in custom technical point-of-sale integrations for more technically advanced retailers. An interconnected device is all that is needed. A computer or tablet with internet access. Our entire process is online, and no additional software is needed.
they are not providing options to 40% of the U.S. consumer market. Most retailers experience anywhere from a 5% to 30% boost to their business with West Creek.
MTD: What sets you apart from other
finance companies?
Acima: Price, customer focus and merchant support set Acima apart. Here’s a breakdown. 1. Price: Acima’s offering has no merchant discount or fees. 2. Customer focus: Acima reports customer payments back to Experian. This helps our no-credit and low-credit customers build credit history. By reporting to Experian, Acima is working to help customers advance up the credit spectrum to where they can qualify for a dealer’s traditional prime options. No other subprime financing companies offer this benefit. Our customer focus is why Acima is the highest rated, most reviewed subprime financing company on Google. 3. Merchant support: Acima’s nationwide sales team and in-field support offer the dealer a level of service and ongoing support that is second-to-none.
Kornerstone Credit: Our internet-based mobile application takes 30 seconds or less to complete, with an almost instant response. It’s currently the quickest in the industry.
We make ourselves available anytime our tire dealer partners need us (24/7). We ensure that our partners’ customers are happy, so they’ll come back to the store to do more business. We offer virtual and in-person training, whichever is better for our partners’ sales teams.
Progressive: Many things differentiate Progressive Leasing from other lease-toown providers. Here are four. 1. Progressive Leasing is the largest and longest tenured virtual lease-to-own provider in the United States. We’ve helped more customers and more retailers than any other player in this space, and that experience allows us to partner with dealers to help drive material, sustainable growth. 2. Having done millions of leases in nearly 30,000 retail locations, we have a large, qualified customer base to market to on behalf of our retail partners. 3. Our in-house, U.S.-based technology and customer and merchant support teams offer highly reliable and scalable turnkey and custom technology solutions and world-class customer and retailer support. 4. Our data science team employs a broad data set of customer and market data along with the latest machine learning technology to maximize approval rates for each and every retailer we serve.
Snap: Three areas set us apart.
Your approval rate?
Your approval amounts?
Your close rate? Acima Industry wide, tire merchants will see approval rates in the low-to-mid 80% range. Kornerstone Our approval rate is as high as 80% with our top performing partners.
Typically tire merchants will see approvals up to $3,000.
Our in-house account reps and nationwide sales team pull out all the stops to ensure you get applications funded. That said, around three out of four approvals will book. We approve up to $5,000.
We have partners who convert up to 90% of their applications into sales which can also increase their business close rate by up to 40%. Progressive Customer approval rates vary between 50% and 80%, dependent on the retailer. We believe in transparency and will not promise approval rates that we believe we cannot sustain.
Our average approval amount is $1,750.
Customer close rates vary between 60% and 90%, dependent on the retailer. Snap There are a number of variables that impact approval rate, so each dealer’s experience will vary. We are told by many dealers who have switched from similar products that Snap’s rates are very competitive if not better.
Snap has approval amounts of up to $3,500.
Snap’s close rate will vary depending upon multiple factors but is typically 80% – 85%. West Creek Our average dealer sees approval rates of 80%+.
They vary from $500 to $5,000.
We see an 80% conversion rate for our average dealer partner.
1. Snap’s superior decisioning and analytics lead to higher approval rates and higher approval amounts, resulting in industry-leading conversion rates. 2. A consumer-focused brand and experience. We know that a happy customer returns over and over again. Snap’s goal is to treat the customer the right way. As we partner with tire dealers, we know that this is key to a successful relationship.
Snap’s commitment to the customer is apparent in our Google ratings (4.5/5 stars) and internal survey metrics (82% of Snap customers would recommend Snap to a close friend or family member). 3. Snap Edge — our proprietary revenue generation engine for Snap tire dealer partners. Snap Edge is designed to find consumers and to lead them to our retailer partners. We know that as our partners grow so will our business grow. It is this alignment that is crucial to a true partnership.
West Creek: West Creek was built by subprime credit experts. We use big data and machine learning to give our dealers industry-leading approval rates. More approvals lead to a larger effect on our dealers’ bottom lines.
MTD: How do you evaluate custom
ers beyond FICO scores?
Acima: Without giving up our secret sauce, there is more to a person than their FICO score. We believe FICO is an outdated solution to a new age problem. Acima doesn’t care much about what happened years ago, we care about where your customers are now. We require three things from a customer: be a real person who we can identify, have a traditional checking account in good standing, and have a source of reliable income. If consumers can meet those three criteria, they should apply and be confident they will be approved.
Kornerstone Credit: We utilize proprietary data that looks beyond credit scores. We believe a customer’s job and banking history are worth more than their FICO score. No matter a customer’s credit history, they can still be approved for up to $5,000.
Progressive: We look at many data points besides credit scores including things like employment and banking history. By doing so we are able to approve many customers with less than perfect credit or with a thin credit file or no credit file.
Snap: There are numerous factors that come into play beyond FICO. Snap uses over 9,000 data points in its machinelearning models versus other credit models that use about 200. It is this significant difference in the amount of data and how it is compiled that leads to the Snap difference in approval rates.
West Creek: West Creek utilizes over 6,000 data points to build its machine learning models. The average competitor uses “off the shelf ” models and minimal data points. This enables us to look for reasons to say “yes,” while others are looking for a reason to say “no.”
MTD: How can dealers contact you?
Kornerstone Credit: Ben Carr at (801) 960-6653, bcarr@kornerstonecredit.com, www.kornerstonecredit.com.
Progressive: retailersupport@progleasing.com, (855) 222-0801, www. progleasing.com.
West Creek: 844.WC.TIRES (844) 928-4737, www.westcreekfin.com/mtd.
A PROVIDER OF LEASES AND LOANS
MTD posed the same questions to American First Finance (AFF), which offers both installment loan programs and LTO programs.
MTD: What services and products
do you offer tire dealers?
AFF: 1. Bank installment loans are offered in 40 states. 2. Retail installment contracts are offered in 21 states. 3. Leaseto-own contracts are offered in 47 states.
MTD: How do your offerings benefit
a tire dealer?
AFF: AFF offers many features and benefits on its products, including low or no down payments, no processing fees
How long for a tire dealer to be paid the full amount of the sale? Acima 24-48 hours. Kornerstone Funding occurs within 24 hours via ACH (automated clearing house).
How long for an LTO application to be processed? The application is quick and easy to fill out. Acima issues decisions within seconds of clicking “submit.” Our mobile application takes 30 seconds or less to complete and the approval happens in a matter of seconds. Progressive ACH payments are typically initiated the same day as the customer transaction, or the next day depending on when the lease agreement is signed.
Many customers complete our application in 5 minutes or less and nearly all of our customer lease applications are processed within 10 seconds of submission. Snap We fund within 2 business days.
The Snap application takes about 5 minutes to complete, and a decision is rendered in 5 seconds. West Creek West Creek provides funding to dealers via ACH transfer 24-48 hours after the customer’s items are delivered.
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on installment contacts and installment loans, a 101-day early payoff discount, contract terms up to 24 months and product offerings across all 50 states. Higher approval amounts and lower, more manageable payment plans allow the customer to purchase tires and related services with a greater tread life versus a less expensive set of tires. This means a better product for the consumer and a higher average ticket for the dealer. AFF’s approvals are up to $5,000, which allows all four tires to be purchased, additional repairs to be completed, and in some cases a remaining open-to-buy amount available for subsequent purchases.
AFF offers bank installment loans through its partner FinWise Bank, and this solution allow the dealer’s customers to finance all products, services and addon products. With a loan, the customer realizes day-one ownership of their tires, as opposed to gaining ownership after they pay off their lease.
MTD: What sets you apart from other
finance companies?
AFF: All products, services and labor are included. Shops that sell tires and wheels offer many other repair services and add-on products. The power of “yes” to a multi-product sale versus a tire-only sale allows the dealer to better service the customer, achieve a higher close rate and increase same store sales all by offering an American First Finance solution.
AFF has developed technology integrations allowing for a single application process which seamlessly flows from primary lender (Citi, CFNA and Synchrony private label credit cards) to secondary lender and tertiary lenders. This allows dealers to offer a finance solution to all customers, and on all of their products and services.
AFF won’t ask the dealer to split consumer sales tickets into one for product and another for labor and services. AFF can lawfully finance all products, services and add-on products. The customer owns the product on day one and the dealer does not have to contend with individual state lease-to-own guidelines.
The process is paperless. No invoice uploading is required and transaction
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funding happens on the next business day.
AFF’s contract durations, up to 24 months, create a more manageable payment plan for the customer. Installment agreements and loans are reported as credit repayments as opposed to trade line payments.
With on-time payments on their installment transactions, the customer can potentially build better credit.
Non-prime customers can qualify for better pricing plans or rate reduction plans with installment programs.
MTD: How long does it take a dealer
to qualify for your program?
AFF: Fully completed dealer applications are approved in about 48 hours.
MTD: What are the dealer transac
tion fees?
AFF: Dealer transaction fees vary but can be as low as a 0% merchant discount rate.
MTD: What technology is required
by the dealer?
AFF: A dealer only needs to have internet access to offer the AFF secure, dealer transaction portal.
MTD: What is your approval rate?
AFF: AFF consistently delivers approval rates around 80%.
MTD: What are your approval amounts?
AFF: AFF approves transactions up to $5,000 including tire and wheels, repair, service and add-on products.
MTD: What is your close rate?
AFF: The “close rates” in our automotive portfolio are in the 70% to 80% range.
MTD: How long does it take for a
AFF: AFF funds its merchants on a next-business-day basis.
MTD: How long does it take for con
sumers to qualify for financing?
AFF: Our application is one of the shortest in the industry, with only 18 fields for the consumer to complete. In most instances, the application can be completed in less than 3 minutes, with real time decisions on approvals and denials.
MTD: How do you evaluate customers
beyond FICO scores?
AFF: AFF develops its own proprietary underwriting models and operates its own underwriting systems, based on 20-plus years of experience in the non-prime consumer finance industry. AFF utilizes the latest technologies and data analysis techniques to convert “big data” into useful, actionable data.
MTD: How can dealers contact you?
AFF: Sales@americanfirstfinance.com.
A LOOK AT 2 CREDIT PROVIDERS EasyPay Finance provides tire dealers with a non-lease credit solution at their pointof-sale that offers customized approvals for customers with good credit to no credit. Synchrony is a source of promotional financing that allows tire dealers to offer customers “same-as-cash” financing that waives accrued interest if the purchase amount is paid in full in a set time period.
MTD: What services and products
do you offer tire dealers?
EasyPay Finance: EasyPay Finance
provides tire dealers with a non-lease credit solution at their point-of-sale, with a unique approach that offers customized approvals for customers with good credit to no credit. EasyPay Finance doesn’t give every customer the same rate; they get the rate that is right for them.
Our program includes approvals up to $5,000, a two-minute prequalification process, six credit tiers to assure customers get the rate they deserve, funds sent same day for completed transaction by 4 p.m. EST; and availability in 49 states.
There is no money down for consumers, which means higher closing rate. There is no cost to dealer other than low 2.99% transaction fee.
We generate and send dealers preapproved customers through our national affiliate network.
Synchrony: 6 and 12 months promotional financing (subject to credit approval), consumer-only, revolving line of credit.
MTD: How do your offerings benefit
a tire dealer?
EasyPay: EasyPay will help approve up to 80% of a tire dealer’s prime lender declines and increase their revenue up to $30,000 per month when used as their alternative customer financing solution.
Unlike leases, EasyPay has no restrictions on financing repair services; customers can finance any ratio of parts and labor.
Synchrony: Synchrony Car Care generates increased sales and loyalty with a revolving line of credit. Consumers can also purchase gas, parking, car washes and more.
MTD: What sets you apart from other
finance companies?
EasyPay: EasyPay has a number of differentiating factors, including an 18-year history of providing superior financing services. EasyPay is not a lease, but a traditional installment finance contract.
Unlike leases, EasyPay has no restrictions on financing repair services — customers can finance any ratio of parts and labor, assuring the tire dealer stays compliant with local and national regulations.
EasyPay gives customers the rate that’s best for them based on their credit history and other determining factors. EasyPay transactions are completely transparent, with fully disclosed APRs.
EasyPay reports consumer transactions to credit bureaus, giving customers a chance to build positive credit. There are no upfront costs to the consumer.
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EasyPay generates pre-approved customers for dealers through its national affiliate network.
Synchrony: Revolving product with no interest promos, repeat usage, multiple promotions, brand extension, marketing/ advertising support, customer satisfaction, free in-store signage, engaging account management, insight sharing and much more.
MTD: How long does it take a dealer
to qualify for your program?
EasyPay: When a dealer submits their enrollment form we can usually get them up and running within 24 hours.
Synchrony: A dealer can submit for enrollment within minutes online or over the phone.
MTD: What are the dealer transac
tion fees?
EasyPay: 2.99%.
Synchrony: Comparable to and often less than bank cards or major credit cards.
MTD: What technology is required
by the dealer?
EasyPay: All you need is internet access and a computer or tablet.
Synchrony: Internet access.
MTD: What is your approval rate?
EasyPay: Up to 80%.
Synchrony: Proprietary.
MTD:
What are your approval
amounts?
EasyPay: Up to $5,000.
Synchrony: A consumer can qualify for financing on purchases of $199 or more (subject to credit approval). If the desired
financed amount is not met, the account holder can call and request a credit line increase.
MTD: What is your close rate?
EasyPay: 80% to 90%.
Synchrony: Proprietary.
MTD: How long does it take for a tire
dealer to be paid for the sale?
EasyPay: Funds are sent the same day if the transaction is received by 4 p.m. EST.
Synchrony: 24-48 hours.
MTD: How long does it take for con
sumers to qualify for financing?
EasyPay: Customers can be pre-qualified without affecting their credit score in as little as 2 minutes.
Synchrony: Instant decisions. Application process is very short.
MTD: How do you evaluate customers
beyond FICO scores?
EasyPay: EasyPay understands that there are a number of reasons a customer may not have a favorable credit score, and goes well beyond this when evaluating a consumer’s creditworthiness. EasyPay’s proprietary algorithm evaluates how a customer handles their bank accounts, as well as several behavioral patterns that are not credit related. Many customers are also approved with a zero credit score.
Synchrony: Proprietary.
MTD: How can dealers contact you?
EasyPay: www.easypayfinance.com, sales@easypayfinance.com, (866) 791-0915.
Synchrony: www.synchronybusiness. com/auto.
