Finance Options Are Available For More Than One Type Of Appreciating Asset

Entrepreneurs who provide educational services to their customers should be aware that they are providing an appreciating asset, for which their customers will be regarded as much more creditworthy, than would the same customer applying for a traditional mortgage.  A small business owner can offer financing through a retail installment contract, and can then sell that same retail installment contract to a secondary funding source so as to improve their cash flow, and profitability.

Consumers will find it far easier to qualify for a consumer loan with a small company, offering such appreciating assets as education, than trying to qualify for a mortgage with a traditional lender.  The first quarter numbers from the Federal Reserve Bank of New York’s consumer credit panel showed that 58% of the $389 billion in mortgage originations went to people with credit scores of 760 or higher.  Consumers with a credit score in the range of 620 to 659 (which many traditional financing sources view as sub-prime credit), received only 4.6% of the dollar volume of mortgage originations in that quarter.

To put that in perspective, if you look at the first quarter of 2004,  people with a credit score of 760 or higher received only 23% of the mortgages , while those borrowers with credit scores in the 620-659 range received 9.7%.  

Contrary to what most people think, the housing market of today (6/16) is primarily for an elite group of borrowers.  While at the same time, consumers with credit scores under 660 qualify for  less than 5% of mortgage originations.

The president of the National Community Reinvestment Coalition in Washington, says that the mortgage market is more restrictive than  it has been at any time in the last four decades. Home ownership for all Americans has been below 64% for the last five quarters.  Home ownership levels have not been this low since 1994.

Nobody wants to return to the lending practices of the mid-2000s; but, concentrating mortgage credit around the very best borrowers is not at all healthy for the overall economy because  it contributes to an ever increasing wealth disparity among Americans.

If you are a small business owner who provides an educational service to your customers, you may want to consider providing a finance option for them through consumer contract financing.  Surely the attainment and possession of a viable and marketable skill can be considered an appreciating asset.

Unlike the housing market where borrowers with  credit scores between 620 and 659 received less than 5% of mortgages offered by traditional financing sources, if you as a small business owner have customers with these type of credit scores, they will almost certainly qualify for non-traditional financing.

College planning services, alternative learning programs, business opportunities, vocational and trade schools, computer certification, dental assistants, truck driving school, heavy equipment training, HVAC or culinary arts are a few of the many educational services offered by businesses today.

The point is that as a small business owner who provides the type of services listed above to their customers, through consumer receivable financing you can provide the doorway to an appreciating asset (their education), which might be otherwise closed to them in terms of seeking traditional finance in the form of a mortgage.

Call today at 864-603-3539  to learn how you can help your potential students with an educational type of consumer finance program!