Why Consumers Want Installment Plans for Online Purchases
According to a new study from Splitit, 35% of consumers are more likely to make a big purchase online if they have the option of zero-interest financing. Why are installment plans so desirable, and what can businesses do to appeal to their customers’ needs?
A staggering 83% of respondents said they worried about overspending when making an expensive online purchase. Having an installment plan alleviates some of that concern because buyers can budget their spending over the course of several months.
A separate study from Klarna revealed that 75% of consumers were more likely to buy from a store that offered instant financing, compared to one that did not have this financing option. In addition, 39% of those respondents said they would spend more if financing was available, and 25% of the Splitit respondents also gave this feedback.
In terms of what consumers expect out of a financing plan, nearly half (47%) the respondents in the Splitit survey said having a 0% interest option was the most important consideration. The second most important feature was an absence of late fees, with 17% saying late fees would cause them to second-guess their purchase.
Many businesses are already exploring new options for customer financing, such as PayPal Credit or the newly released Square Installments. These payment plans are not always interest-free, but they do provide an alternative to credit cards and large upfront payments.