CBJ: ND3 Column [The Daily Progress, Charlottesville, Va.]
(Daily Progress, The (Charlottesville, VA) Via Acquire Media NewsEdge) Sept. 16--A digital consumer-finance tool designed by a Charlottesville-area entrepreneur is reshaping an important aspect of the retail process.
Dave Weyher, a software industry executive with 25 years of experience, began LendPro in early 2011. Today the company's service is in about 245 retail locations nationwide.
Here's how LendPro works: If a customer wants to finance a purchase, they approach an in-store digital kiosk or enter their information on an in-store tablet computer. In a few moments, they'll learn if they've been approved and the amount of financing they're eligible for.
If they're not approved or they don't like the financing terms, they can try again through a different lender with a few taps on the screen, without re-entering all of the data or generating piles of paper or tying up a store clerk to enter data.
"The liability of personal data lying around the store or getting into the wrong hands is eliminated and the whole efficiency of the process is improved dramatically," said Weyher.
Financed purchases are the lifeblood of stores that sell big-ticket items -- jewelry stores, furniture stores, large-appliance retailers or any retail operation where most items go for $500 or more, Weyher said.
LendPro does not lend directly to the customer, but instead serves as a conduit to bring customers and lenders together, said Weyher. What the customer pays will depend on which lending company finances the deal. Lending rates are regulated by the state and federal government.
Prime credit consumers usually get 0 percent financing but Weyher said those with less than prime credit may pay more.
Greg Fairchild, a professor at the Darden Graduate School of Business Administration at the University of Virginia, said it's important for consumers who are considering a lending arrangement to ask questions. Lenders, he added, should also take the initiative to explain things in plain language.
"Sometimes, you'll take a loan and they'll tell you that the [interest] rate is 4 percent, but when you add up all the fees that you pay ... or miss a payment and get a service charge, the actual effective cost of the loan can become very high very quickly," said Fairchild.
Among other topics, Fairchild studies the unbanked -- people who choose not to use traditional financial services or are unable to do so for a variety of reasons.
"Knowing that a lot of consumers are not that knowledgeable about the way financial products work, providing information to people about what their true and effective interest rates are is really important," Fairchild said. "That's a lot to ask a business to do."
At the same time, "LendPro appears to be creating opportunities for customers to be able to purchase things in retail locations [for those who] don't have a credit card or ... don't have another form of credit. That's a great thing for retailers because they can increase the number of sales they make," said Fairchild.
Although digitizing things might seem like an obvious step, Weyher said many small and mid-sized retail stores are "notoriously behind" when it comes to adapting technology.
But slipping behind the technology curve puts retailers in peril, because purchases financed in-store represent between 25 percent and 35 percent of sales, according to Weyher. Many people can afford to pay in full up front, but choose in-store financing to spread out the impact on the pocketbook of a large purchase.
Those that have upgraded, like Waterfall Jewelers, a Michigan-based company, say they're seeing the benefits.
"Prior to using LendPro, we were spending 30 to 45 minutes with a customer, only to have them not be approved for financing," Mark Ettinger, a company co-owner, said by email. "Now with LendPro's multiple finance options and easy-to-use system, we're approving more customers and have increased our sales approximately $30,000 in a short period of time."
Looking ahead, Weyher said LendPro might also be a good fit for consumers who are purchasing aftermarket automotive parts and service, musical instruments or even healthcare services such as dental implants or Lasik eye surgery.
But Weyher said current consumer purchasing behavior comes with a caveat.
"Clearly, retailers are not out of the woods," said Weyher. "It's still a very cautious market. Financing sales is still very important for consumers -- they are not flush with cash. The consumer is cautious but willing to finance."
(c)2013 The Daily Progress (Charlottesville, Va.)
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