FAQ | InStore Financing

Q: How is InStore Finance different from other consumer finance lenders?

A: InStore Finance is a seller finance program that allows retail merchants to finance in-store purchases made by their customers with minimal risk and effort. The retailer collects a down payment at the time of purchase (usually enough to cover the Cost of Goods Sold) and then InStore Finance collects the remaining balance plus fees and interest over time. The retailer keeps all of the interest that is collected.

Most traditional lenders base their approval decision solely on the customers credit score in which 50% of customers get declined and cannot make the purchase. These traditional lenders also charge a discount fee (sometimes very substantial) to the retailer that is deducted from sales proceeds and the lender keeps all of the interest.

InStore Finance is typically used as a financing option when traditional finance programs decline a customer. This means that you are capturing lost sales from customers that were declined by other lenders. This allows your customers to take their purchase home that day, generates additional income with the interest you collect over the term of the contract, and helps you acquire a new, loyal customer.

Q: How is InStore Finance beneficial to the customer?

A: InStore Finance provides a financial alternative for customers that may not qualify for traditional financing. With InStore Finance, the customer get’s approved and walks away with their purchase TODAY!

Q: Are there incentives for my customers to pay off their balance early?

A: Yes. If the customer pays off their balance within the first 90 days, there is no interest.

Q: What is required of the customer?

A: (1) Complete the InStore Finance application (2) get a copy of the customers driver's license (3) obtain a voided check or proof of active bank account (4) customer must pay the $49 processing fee collected by InStore Finance (5) collect about 50% of the total sales amount plus applicable sales tax.

Q: Does the down payment have to be 50%?

A: No. The retailer can require any down payment they want above 40%. This means that you are in control, however, InStore Finance will not approve any contract that has a down payment amount below 40%.

The InStore Finance system will default to a 50% down payment when you enter your sale information into the system, but you can change the down payment amount before completing the processing.

Q: Why such a large down payment?

A: There are a couple of very important reasons for requiring a large down payment (1) It minimizes your risk of loss, since you are covering all or most of your cost by collecting the down payment at time of purchase you are only risking gross profit in the event that a customer doesn't pay off their balance in full (2) customers that put down a large down payment are more likely to pay off their contracts in full and on time.

Q: Do I get all my money up front?

A: You get paid for all (or most) of your Cost of Goods Sold up front by collecting a large down payment. InStore Finance collects the remaining balance due over 9 or 18 months including interest that you get to keep.

Q: Are there advantage to collecting payments over time?

A: Yes. You are able to complete the sale, collect interest, and let the customer take their purchase home today, but there are some other benefits to consider:

(1) When you collect payments over time you create a monthly revenue stream that provides cash flow in slower months that includes interest collected from your customers.

(2) When you are able to spread payments over time, your customer may be able to afford a higher priced item or may be able to purchase multiple items at the same time.

Q: Will this help my profit margins?

A: Absolutely. Financing can help you avoid additional discounting to close a sale. You can now negotiate the down payment amount or possibly offer to cover the cost of the $49 processing fee instead of offering to lower your price.

Q: Are there limitations to the amount financed?

Q: Will I be charged a fee if I don't process a minimum number of contracts each month?

A: No. Unlike other lenders there are no monthly minimums. You only pay for what you use.

Q: What is the length of the contract?

A: InStore Finance will automatically determine the payment term based on the amount financed. If the amount financed is under $2,500 the term will be 9 months. If the amount financed is above $2,500 the term will be 18 months. The system is set up this way to assure affordable monthly payments for your customer.

Q: What happens if a customer stops paying?

A: We’ve already minimized your risk by requiring about a 50% down payment and paying you the interest collected on each customer account, but non-pay does happen. InStore Finance has an effective collection process that includes late notices, collection calls, and attorney letters. If we still cannot collect on a past due customer, we place the account with a third party collection firm and send you the net amount collected after their fees. If this happens you do not continue to pay the InStore Finance processing fee. InStore Finance only collects its fee when we collect your payments. This means that InStore Finance is sharing the risk associated with non-payers. Currently we are paying our InStore Finance retailers over 90% of the total annual amount financed by their customers

Q: Why can't we just offer layaway?

A: Layaway can be a good option for some purchases, but it's not always what your customers wants. Customers often need to take theirpurchase home long before they will be able to complete the layaway payments.

If your only option to the customers that get declined for traditional financing is “layaway”… you’re losing revenue.

Q: Is this a loan?

A: No. This is a Retail Installment Contract between InStore Finance andthe consumer that is serviced by InStore Finance. The contracts and disclosures provided by InStore Finance are compliant with all state and federal disclosure and Truth In Lending requirements for Retail Installment Contracts in the U.S.

InStore Finance provides you with an in-store financing solution designed to help you increase revenue by providing an alternative financing option that doesn’t require a high credit score for approval. It is a close-ended retail installment contract for 9 or 18 months (depending on the amount financed) that requires a large down payment at time of purchase. InStore Finance handles everything else, collects principal and interest (that you keep) and sends you a monthlypayment and detailed activity report for all your active InStore Finance contracts.