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Is there a need for financing for your digital products?

by adogg
21 replies
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I was not sure where to post this since there did not seem to be a good category but I thought it maybe a good fit here. Is there a need for software that provides online loans to people buying higher end products.

A company has a product and the user does not have the money to purchase the product up front. You enter the persons email, loan amount, and you can see the payment that you know they can afford into the system and they get a loan application. They fill out the personal information loan application and sign a legal payment agreement. The immediately make their first payment with a credit card or checking account. and they are auto billed with interest until all payments are made.

Doing this does a few things. It keeps you as the seller from having to collect money. These are people that maybe could not get a loan through affirm and everyone gets approved in this system. It does not devalue your product so you have to undercut the cost of your product. You get all the money that you are asking in payments and you don't have to be the "bad guy." You also have a legally binding payment agreement with the customer.

Would this be beneficial for people selling higher ticket items?
  • Profile picture of the author tagiscom
    It all depends on whether or not the product ACTUALLY gives you a real way of getting it back and more.

    Most products out there for 2k or more, are garbage in that regard, sure you get a truckload of videos and audio, but no sure fire way of making it back.

    So tough question to ask, but probably no, if someone has to pay 2.5k instead of 2k, to get it now, and after a month or two throws it on their hard disk and forgets about it, then l wouldn't advise it.

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    • Profile picture of the author adogg
      I am talking about software that allows merchants to get their customers financed for their high ticket items.
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      • Profile picture of the author tagiscom
        Originally Posted by adogg View Post

        I am talking about software that allows merchants to get their customers financed for their high ticket items.
        Oh, ok,....the benefit is they make more money.

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        • Profile picture of the author adogg
          exactly. increasing revenue without them discounting products and they already have the first payment. And we can sell the payment agreements to other companies.
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  • Profile picture of the author hardraysnight
    i think visa have a similar service already
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    • Profile picture of the author adogg
      There are a couple that do, but they don't all get approved.
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      • Profile picture of the author yukon
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        Originally Posted by adogg View Post

        There are a couple that do, but they don't all get approved.


        So you're going to approve anyone in the world that has the first payment?

        Not exactly a solid plan.
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        • Profile picture of the author adogg
          Exactly. Really what you become is an automated billing company.
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  • Profile picture of the author girishdkale
    I think Paypal has a similar financing option.
    https://www.paypal.com/us/webapps/mp...onal-financing
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    • Profile picture of the author adogg
      The difference is they do a credit check and you have to get approved. many people can not get approved.
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  • Profile picture of the author Vinciente Verrazzano
    I know of an MLM that is looking for financing options. Could you send me the details of what you have to offer companies that are looking to work with a lender?
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    • Profile picture of the author adogg
      DM me I had not thought about working with MLM's before but I could see that being a good fit.
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  • Profile picture of the author Kay King
    but they don't all get approved.
    many people can not get approved
    Why could that be? Because they don't pay bills on time? Because they have no income to guarantee payment? Because they have never established any credit history because they are too young or it isn't possible in their country or....

    There's a reason people must "qualify" for loans. That's why many sellers with high cost digital products offer a split payment plan to get more sales.

    If someone pays the first payment and nothing else - what will you do? Go to his country/city/street and knock on the door? Would a collection agency take on collection of unqualified debt? Would it be worth collection fees?

    If you read through this forum - through the many threads about "need it free" - "need money now" - "how to earn"...blah blah...ask yourself if you would loan your own money to that person.

    And we can sell the payment agreements to other companies.
    The riskier the loan - the higher it is discounted in a resell market - a loan with no qualifiers would be worthless to second market buyers. You can't collect money from someone who has none.
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    • Profile picture of the author adogg
      I agree with everything you say, however digital products don't have the hard costs as other goods and services. It pulls the content provider out of the situation of collecting and they do not have to discount their services. Also many content providers have an upsell when they buy a product... it gets them into their system to buy other products.
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    • Profile picture of the author Claude Whitacre
      Originally Posted by Kay King View Post

      If you read through this forum - through the many threads about "need it free" - "need money now" - "how to earn"...blah blah...ask yourself if you would loan your own money to that person.
      The riskier the loan - the higher it is discounted in a resell market - a loan with no qualifiers would be worthless to second market buyers. You can't collect money from someone who has none.
      There are companies that will finance anyone with a valid Social Security number and a phone. You'll generally get 40% of the loan amount. I used these companies when selling vacuum cleaners. It would cover my cost..plus a little profit, but I wouldn't have to go pick up the vacuum cleaner from them.

      And some products, like courses and seminars would love that deal, because their costs are so low.


      My experience is (selling high ticket items for decades) is that people either have;
      A) Credit cards that will allow them to charge almost anything except cars and homes.
      OR
      B) Terrible credit and can't get approved at any bank or finance company.

      Sure, there are some people in the margins, but most are either really good or really bad.
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      • Profile picture of the author adogg
        So in Scenario B. B) Terrible credit and can't get approved at any bank or finance company.

        Is there any downside to getting a first payment out of high priced digital product and only getting one or 2 more payments? I think it is a win win.
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        • Profile picture of the author Claude Whitacre
          Originally Posted by adogg View Post

          So in Scenario B. B) Terrible credit and can't get approved at any bank or finance company.

          Is there any downside to getting a first payment out of high priced digital product and only getting one or 2 more payments? I think it is a win win.
          No. In fact, there are several upsides to financing it yourself;
          1) Some people can be converted out of the monthly payment to just pay in full (after they bought with payments)
          2) Some people will actually pay every payment (if it's automatically deducted)
          3) Some people will make a payment or two an then quit.

          There is a huge upside to having an outside company finance a digital product, coaching, a course, a seminar.

          And the upside is that once the product is delivered...or the seminar is given...almost nobody does anything with it. So the odds are very high that they will simply stop paying.
          And that's why these payment customers are called to try to arrange other financing or use a credit card...anything to get them off the monthly payment. Because the drop out rate is so huge.

          Originally Posted by socialentry View Post

          @Claude

          did you think that a lack of financing would have changed your results?
          In my store? It wouldn't make any difference at all. I haven't had anyone need to finance for years.

          In people's homes? Yes. It made a huge difference. I stopped selling in people's homes about ten years ago. But I was selling a $2,000 item, and many people simply didn't have $2,000 available to write a check. And as a business selling in home, it was hard to get a credit card company to process our charges. It was easier to get a finance company to accept our installment loan applications.

          Today, it would be far easier to get set up with a credit card company. But 20 years ago, it's wasn't easy at all. You had to have a retail location, and the "3 day cancellation clause" (meaning they had 3 days to cancel) made charging credit cards a hassle. And after one or two customers called the card company...saying they changed their minds...we would lose our processing. And customers could get out of a deal if they charged a credit card, much easier than if the financed...let's say 3 months after they bought.

          Also, the majority of people I talked to were lower middle class workers. Why? Because they were easier to see. They were home in the evening, and I could get both the husband and wife together without much problem. Most didn't have $2,000 available on a card, even if we could charge cards. The last 5 years or so, we could.

          Having a finance source for bad credit customers made selling much easier, because I could leave the vacuum in the home knowing I'd be able to get it financed no matter what.

          Today, if someone doesn't have the money or the credit, I simply sell them a cheaper vacuum cleaner.


          Tom Hopkins used to sell a library of his VHF tapes for sales training. At a seminar, he sold them for $1,999...or payments of $199. Most people took the payments. But years later I talked to someone that used to work for him, and they said that they would work very hard o convert those payment buyers into paying in full, even offering huge discounts for full payment. Why? Most people would make 2 or 3 payments...and then stop.
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      • Profile picture of the author socialentry
        @Claude

        did you think that a lack of financing would have changed your results?
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  • Profile picture of the author Kay King
    Claude is right about the high risk financing companies - but they have a physical product. I can't see it working as well with digital.
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  • Profile picture of the author Dan Riffle
    So, you want to provide a digital product up front and provide a financing plan to people who have a history of not paying their creditors.

    You say it's no big deal because the products have a low cost to produce. You're missing something: opportunity cost. Somebody has to chase down the deadbeats who don't pay. That's either the vendor (who's now being taken away from what he does best: marketing) or he has to pay a collector.

    This may or may not work out in the long run. What will probably happen is you'll find a percentage of people who would have paid in full take advantage of the payment option. Some of those who would have paid in full will stiff you.

    Are you going to report collections/chargeoffs to the credit bureaus? If not, other than a flimsy legal obligation that you have to enforce in court (is your legally-binding payment agreement viable in every jurisdiction you have customers?), there's no repercussion to not paying you. Once the word gets out, you (your vendors, actually) are up shit creek.

    That's my quick two cents.
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    • Profile picture of the author Claude Whitacre
      Originally Posted by Dan Riffle View Post

      Are you going to report collections/chargeoffs to the credit bureaus? If not, other than a flimsy legal obligation that you have to enforce in court (is your legally-binding payment agreement viable in every jurisdiction you have customers?), there's no repercussion to not paying you. Once the word gets out, you (your vendors, actually) are up shit creek.

      That's my quick two cents.
      I've done ventures with seminar providers that would finance. If the person stopped paying, there was a token effort to collect. But they generally let them go. It's easier to sell a new person than try to collect on deadbeats. And the people that you would call? They were the ones that would g to consumer complaint agencies and complain about you....Of course it was your fault they weren't paying.


      The big problem is affiliates, or joint venture partners...or paying commissions to phone solicitors. You may pay out 50% of the sale amount as a split of commissions....and then the customer stops paying. Now you're out the 50% you already paid your partner.

      Charging the buyer's card is the solution. The charge backs are far lower than the lost revenue from deadbeats that simply stopped paying. And if you get checks? Most aren't good. It's a major problem in seminar sales. Maybe 10% will want to pay with a check. But 75% of them are bad checks.

      It's just the nature of the business.
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