Interest Bearing Credit for retailers
Fixed amount, fixed rate, fixed term. It's as simple as that.
Nowadays, customers are not only comfortable paying with finance, they expect flexible payment options to be available. Give your customers the option to buy what they want now and spread the cost over a timeframe that suits them.
What is interest bearing credit?
Interest bearing credit works in a similar way to a traditional loan. Customers receive their goods straightaway but pay for their purchase over a set period by making a series of equal monthly repayments.
Interest will be charged at a fixed rate, helping customers manage their outgoings as they’ll always repay the same amount each month.
“We’re seeing a gradual uplift in the number of retailers onboarding interest bearing credit, either as a standalone option or in conjunction with other products such as interest free finance.
This is partly due to a shift in consumer demand for low-APR loans over longer terms. Customers are looking for ways to make the cost of large ticket items more manageable, and low monthly instalments is a great way to do this. By offering interest bearing credit, retailers can make their products and services more accessible to customers who wouldn’t otherwise be able to afford high monthly repayment amounts over a shorter term.
Retailers are also grappling with rising costs and high subsidies can really squeeze those profit margins. With interest bearing finance, a customer is charged interest and their total cost of borrowing offsets either some or all of a retailer’s subsidies. In some cases, this results in a cost-neutral finance offering for businesses. Ideal for sectors such as Technology or Electricals, where profit margins are already tight.”
Simon Pether
National Retail Manager
Benefits of interest bearing credit
Reach more customers
Encourage both new and existing customers to choose you. Allow them to spread the cost of their purchase and give customers more confidence at the checkout.
Increase average transaction value
Upgrading or adding to their basket won’t seem like such a big expense if your customers are spreading the cost rather than finding the money upfront.
Offer flexibility on payment terms
Interest bearing credit allows customers to spread the cost of a purchase over a longer period – up to 120 months. Ideal for those looking to make lower monthly repayments.
Cost-neutral credit
For those looking for a cost-neutral option, interest bearing finance could be the solution for you.
The interest rate customers are offered is chosen and fixed by you, the retailer. All customers who choose a comparable product will be charged the same rate. There’s no distinction in rates based on a customer’s creditworthiness or affordability (though this will, of course, be assessed during the application process).
If you choose not to contribute towards the cost, the customer will pay interest to us directly as part of their monthly repayments. In this case, offering retail finance won’t cost you a thing.
Alternatively, contributing towards the cost could, in some cases, bring the APR down for customers. This could make interest bearing finance a more attractive proposition, helping to increase conversions.
How to choose the right option for your business
You may be considering whether to offer interest free or interest bearing credit – or perhaps both. While interest free finance is an appealing option to customers, allowing them to spread the cost without any extra cost, retailers will be required to pay a subsidy. Interest bearing finance charges the customer low levels of interest to cover some or all of your subsidy charges – making it a potentially cost-neutral option for your business.
We work with over 3,000 leading retailers across key sectors including leisure, furniture, home improvements, electrical and jewellery. Our team of highly experienced specialists will help you to discover which retail finance options are most suitable for you.
Choosing Novuna Consumer Finance
Work with one of the UK’s leading point of sale credit providers to offer interest bearing credit to your customers. Here are just some of the reasons you should choose Novuna.
Ready to join our network of over 3,000 UK retailers?
To work with us, you will need to be offering products or services for consumers (not for other businesses) and be trading profitably. You will also need a minimum of:
Please note, we do NOT currently work with the following industries: renewable energy (including solar), dentistry, invasive healthcare, clothing, personal development or training solutions.
If you meet this criteria, we'd love to hear from you. Please complete the form and one of the team will be in touch within three working days (usually the same day).
If you are an existing retailer with a general enquiry or a customer looking to speak to someone about your retail finance or personal loan agreement, click here for contact details and opening hours.