Why Point-of-Sale Lending is Hot Right Now

Many consumers — millennials in particular — have a love-hate relationship with credit.

They are comfortable borrowing for specific purposes, such as paying for school, buying a car or even financing a dream wedding. But research conducted by banks and fintechs has found that many younger Americans are uncomfortable carrying credit card balances, partly because they saw their parents struggle with debt during the financial crisis and prefer the more certain repayment terms of installment loans.

The process has to be simple not just for the borrowers, but also for the contractors and merchants that are offering the financing and leasing options in the first place, said Bob Wickham, an investor in Microf, a fintech lender that makes point-of-sale offers to homeowners seeking upgrades to their heating, ventilation and air conditioning systems. The six-year-old Microf has partnerships with thousands of HVAC dealers and dozens of distributors and primarily works with homeowners with slightly blemished credit records.

“The point-of-sale financing has to be quick and easy for contractors to use,” said Wickham, a partner at Rotunda Capital, a private equity group in Bethesda, Md., that invested roughly $18 million in Microf in 2015 and 2017. “During the busy season, these guys are often working 7 a.m. to 7 p.m. and they aren’t going to take the time, nor do they have the time, to suffer through a complicated application and funding process.”

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