In-House Financing

In-house financing is a type of seller financing in which a firm extends customers a loan, allowing them to purchase its goods or services. In-house financing eliminates the firm's reliance on the financial sector for providing the customer with funds to complete a transaction.

In-house financing is provided by many retailers helping to facilitate the purchasing process for customers. Retailers must have an established lending business within their firm or partner with a single third-party credit provider to service credit for their customers.

The automobile sales industry is a prominent user of in-house financing since its business relies on buyers taking auto loans to close the purchase of a vehicle. Offering a car buyer in-house financing helps a firm to complete more deals by accepting more customers. Automobile dealers also have the benefit of setting their own standards for underwriting which can sometimes encompass a greater number of borrowers by potentially allowing for lower credit score acceptance. In many cases, these lending platforms will accept borrowers that banks or other financial intermediaries might turn down for a loan. Other industries offering in-house financing may also include equipment manufacturers, appliance stores or e-commerce retail stores.

With the emergence of new financial technology companies and systems in the credit market, many borrowers now have greater in-house financing options through faster and more convenient point-of-sale credit platforms that are backed by the selling company. Point-of-sale credit technology can be built around a company’s in-house credit department or generally facilitated when a company partners with a single credit provider to service their customer’s lending needs.

Point-of-sale financing simplifies the lending process for customers by allowing them to apply for credit at the point in which they are ready to buy. Point-of-sale financing makes credit convenient for customer’s since they can receive a credit decision from the retailer in minutes. Point-of-sale financing is also conveniently integrated into the sales process technology for retailers making the deal easier to close.

Ford Credit is one of the most well-known in-house auto financing groups. In January 2017, Ford Credit partnered with AutoFi to make car buying and financing even easier through technology that allows the buyer to shop online for their car and auto loan. With this new point-of-sale platform, Ford customers can shop online through Ford dealer websites, buy and finance their car. This type of customer experience allows car buyers to spend less time at the dealership while also offering a faster sales process for Ford.