Financing is one way to help your customers get the tires they need. But what about those who don’t qualify for traditional financing? Subprime or tertiary financing, including a lease-to-own financing provider like Snap Finance, can help fill the gap for consumers. It can also be an incredible opportunity for merchants, bringing them increased sales, more loyal customers, and a competitive edge.
To better understand the impact a lower credit score can have on the tire shopping journey, Snap Finance surveyed consumers with and without credit challenges. We wanted to better understand how those facing credit challenges, specifically those with a FICO® score below 670, get the tires and rims they need. We found that for many, paying over time is their only option. Let’s take a closer look.
How credit scores influence the way people shop for tires
When money is tight, people often put off spending unless it’s absolutely necessary. Among those with low credit scores, 87% of tire and rim purchases were for repairs, compared to just 11% of purchases for upgrades.
No matter their credit score, most consumers shop around for tires and rims at physical stores. However, those with lower credit scores are less likely to visit store websites and consumer reviews, which may mean they’re less prepared to make a buying decision than other shoppers. Offering this customer segment more assistance, guidance, and product education can help retailers close the sale.
While deals matter to most tire shoppers, they seem to matter even more to consumers with credit troubles. Among those with lower credit scores, 32% made their purchase sooner than planned due to a limited-time sale or offer, compared to 22% for other consumers. Previous experience with the brand, good consumer reviews, and a well-known brand are also important factors in their purchasing decisions.
When analyzing the shopping habits of consumers for their most recent tire purchases, we also found that those with credit challenges tend to favor local small businesses and big-box retailers more than other consumers.
- Among those with lower credit scores, 28% purchased tires at a major tire store chain, 27% at a local small business, and 18% at a big-box discount retailer.
- Among those with higher credit scores, 40% purchased tires at a major tire store chain, 17% at a local small business, and 8% at a big-box retailer.
The role of financing in tire shopping
When the cost of tires is higher than budgets and savings allow, financing can help consumers get what they need now and pay over time.
Among consumers with credit challenges:
- 31% said they could not have paid for their tires or wheels without financing.
- 60% said financing makes purchases more affordable.
Financing can also help retailers increase their average order volume. On a recent purchase, 42% of those with low credit scores said financing led to them spend more.
Those with lower credit scores may not qualify for traditional financing or credit cards. As a result, just 12% have used a card to buy tires, compared to 56% of those with higher credit scores. Instead, consumers with credit issues are more likely to pay for tires with a debit card (45%), cash (27%), or other financing (14%).
For future tire purchases:
- 61% are interested in using a general-purpose credit card.
- 49% are interested in using store credit cards.
- 49% are interested in using an installment loan.
- 34% are interested in using lease-to-own financing.
How consumers navigate financing options
How do consumers decide what form of financing to use? In-store advertising and a knowledgeable sales team play an important role in informing customers about financing options. Among those with lower credit scores, 29% learned about options to finance their tires and rims from store employees, 17% from the business’ website, and 12% from in-store advertising.
To help close the sale, ensure your sales associates are well-versed in available financing options and can easily walk customers through the application process for each.
Grow your business with a more inclusive approach to financing
Nontraditional financing options can be a lifeline for customers with lower credit scores, enabling them to get the tires and rims they need now. By adopting a more inclusive approach to financing, tire shops can broaden their customer base, drive more sales, and grow their business.
To get started on attracting and converting more customers with a lease-to-own financing solution that welcomes all credit types, head to snapfinance.com/partner.
About Snap Finance
Founded in 2012, Snap Finance helps customers with less-than-ideal credit get what they need and want through thousands of U.S. merchants. Snap-branded solutions include lending and lease-to-own financing solutions to help you grow your business and attract new customers. Snap’s proprietary, machine learning-based decision-making technology brings modern payment options to consumers who may not qualify for traditional financing.1
For more information, visit snapfinance.com.
Snap-branded product offerings include retail installment contracts and lease-to-own financing. Talk with your local Snap sales representative for more details on which product qualifies at your store location. For more detailed information, please visit snapfinance.com/legal/financing-options.
Survey findings based on proprietary research from Snap Finance, 2023.
1 While no credit history is required, Snap obtains information from consumer reporting agencies in connection with submitted applications. Not all applicants are approved.
The content of this article is for informational purposes only and should not be construed as personalized legal, financial, or other advice. This article represents paid promotional material provided by or on behalf of Snap Finance, LLC, or its affiliates.
