This is a great system that is perfect for small businesses. I have personally seen this program generate a 25%-40% increase in sales simply by telling people you offer “No Credit Check Financing.” This article will show you step by step how to set it up and many ideas related to advertising the plan.
LEGAL NOTE
By implementing the concept discussed in this article, Personalized Concepts inherits no responsibility for loans being paid, for legal issues, or for anything else that results from the use of this information.
The legal notice is essential. We offer a “90 Day Financing Plan” that is guaranteed. We take care of the details and the risk. There is no risk for the trader. This article is based on the idea. You can put many things in place to ensure that loans are repaid. This will be your responsibility. We will discuss them and let you know the pros and cons.
You will need a good file management system. If you have a business, this is not really a problem. I recommend that all paperwork be scanned into their system. This allows for quick recovery if there is a problem with the contract the customer signs.
Below is an example that does not collect finance charges from the customer. This would qualify your program as “Same as Cash Financing”. You are allowed to charge finance charges and application fees. This would create another source of income for your business, but you cannot advertise “Same as cash financing.”
The choice is up to you.
Example:
Yoshi walks into your store and wants to buy your product or service, but doesn’t have the money and has bad credit, no credit, or just doesn’t want to take out a loan. The item costs $1,000. Yoshi says that’s too much right now. He explains that he can offer you a “No Credit Check Financing Option.” He says “Great”. You and Yoshi agree on a payment schedule that will fit your budget. He agrees that $200, every two weeks, would fit his budget.
Yoshi will then write you five postdated checks for $200 each. Five $200 checks equal the sale price of $1,000. I know that there is someone who says that it is legal. Yes. The law with post-date checks is very vague.
The two main things that come into play are:
1. If the customer writes a post-dated check that they know will not be valid on the post-dated check. This is a form of fraud. The client is wrong.
2. You cash the check before the posting date. When you and the customer agree on the payment schedule, you agree to cash the check on the dates set forth in the contract. You’re wrong. They can sue you for the fines incurred and many other things depending on your state.
It’s a good idea to keep postdated checks within 90 days of the date of sale. This is safer for you and the customer.
The check must be kept in a safe place (in a safe). This will ensure that they do not fall into the wrong hands.
Next, you will need to tidy up the file system. You’ll need a way to let you know when checks are due. You can do this in two ways.
The first would be a basic folder arrangement. Create a folder for each week. Check the binders at the beginning of the week to see which checks need to be cashed.
The second and probably preferred would be a basic program with Excel or some other spreadsheet program. This would require you to enter the information into your system, but would save the time of setting up the file. You’ll set up the spreadsheet to organize payments by date. Review the spreadsheet each day to see which checks need to be cashed.
Here are a couple of things to protect you against fraud and non-payment.
The following options are at your discretion. You can use one of them or all of them. The more you implement, the more protection you have that the client will not default on the loan.
These first three are, in my opinion, essential.
1 Obtain a copy of the clients identification
2 Obtain a copy of your most recent paycheck stub. You can go one step further and verify employment. You can call the employer or you can send a fax to the Human Resources Department. The easiest way is to call. They can’t give you much information over the phone, but they can tell you if the client works there and if there is anything that might affect their future employment.
3 Call the bank to verify that the account is up to date.
4 Check the checks. If you have a merchant account that can process checks, this can be simple. If you don’t have verification verification, you can call your carrier and check prices to set it up. If you don’t have check verification and don’t want to pay for the service, there are other options. They are not as reliable but will work. Physically go to the bank where the check was written and cash it. If there are no funds, they will tell you or charge you and charge the customer an overdraft fee. DO NOT DO THIS WITH POST DATED CHECKS. This should only be done with checks that are not post dated. You and the customer reached an agreement that you would not cash the checks until the date of the checks.
5 Check the customer’s check writing history. This can be done in a couple of different ways. Visit National Check Network.com (NCN). You can also do a Google or ASK.com search for “How to check a customer’s check writing history.” These systems can vary in cost and quality. We use NCN. This option will let you know if they have outstanding bounced checks, a history of bad check writing, or any past check fraud.
These are the basics and if you want to modify it to better suit your business, great.
We have a customizable contract on our website available for download. The form is a PDF. If you don’t have a PDF editor, you can go to PrimoPDF.com and convert the file to a .DOC file. This contract is free of charge and we will not ask you to provide us with any information. This is a great tool that will save you some time. There is no need to design your own. This is the exact way we use.
We also offer “No Credit Check Financing” which eliminates risk and is very easy to use. We implement the above procedures and guarantee payment to the merchant. If the customer defaults, we will honor the payment and take steps to recover any money owed. The fees involved are typically less than what it would cost you if you set up check verification and check writing history verification. It is guaranteed to save you time.
Advertising
Advertise “No Credit Check Financing” everywhere. Here are some suggestions.
Get a sign/banner stating that you have the program. We have a local company that will paint the letters. You can also ask your local sign maker for help. Window sconces, sconces for your car, magnets for your car, the list goes on and on.
Change the audio on hold to say “No Credit Check Funding” and also the voicemail recordings. Be sure to mention the plan when you answer the phone.
Include the program in everything your company uses for advertising.
* Yellow Book Ads
* Business letters
* Brochures
* Website
* Tshirts
* Vehicles
* You must make it visible to as many people as possible.
Do a local radio commercial stating that you now offer “No Credit Check Financing.” This is spectacular if you can afford the means.
I hope everyone reading this doesn’t find it a waste of time. If you can’t use the information in this article, please pass it on to someone who can. If you wish, you can download an exact copy of this article and contract here. We will not ask you for any information. I will write more articles in the near future. The article will discuss the ways small businesses can increase their sales with various techniques. Subscribe to my newsletter if you want to receive an email when they are published.
