Finance promotions with reduced or zero interest are great for getting prospects interested, motivated, and excited to leverage flexible terms and enhanced buying power to invest in better technology solutions than they might not be comfortable buying otherwise. But how do they work from a technology vendor's perspective?
Finance Rate Buydowns
What They Are
Why They Drive Sales
How to Get the Most From Them
0%
Interest
Here's what you need to know to get started with one of the most effective sales tools available — finance rate buydowns:
What's a Finance Rate Buydown?
Want to offer 0% financing to boost sales? A finance rate buydown lets you do that anytime by either subsidizing finance costs using your margin or increasing your quote to absorb these costs. Finance rate buydowns come in two types: frontend and backend.
Frontend Buydown
Backend Buydown
Frontend Buydown
Backend Buydown
In a frontend buydown, you work with your finance partner to determine the cost to buy down interest and then build that amount into your quotes. This way, you can offer an attractive finance promotion without affecting your margin. Here's how it might look with a $52,000 sale:
Frontend Buydown
Example
$52,000
Vendor Product Cost
to Customer
$57,000
Vendor Product
Quote to Customer
$10,000
Original Profit on Order Was $10,000 — After Subsidy It Still Is
$5,000 Cost to Buy Interest Down
— Vendor Builds Subsidy Amount Into
the Quote, in the Form of GP
LEAF Issues a Purchase Order to Vendor in the Amount
of $52,000
At this point, you may ask yourself, “What’s the advantage to my customer if they’re paying the same as they would with standard financing?”
Good question. The answer is that frontend buydowns aren’t about saving money — they’re about simplifying procurement. By giving your customer the option to finance at 0% interest, you allow them to eliminate many hurdles in a procurement process that can involve getting buy-in from financial officers, investors, shareholders, and other stakeholders who appreciate the advantages of a multi-year solution but have concerns about the impact to financial statements.
A Note on Frontend Buydowns
To learn about backend buydowns, click on the backend buydown button above.
How Finance Rate Buydowns Drive Sales
Both frontend and backend finance rate buydowns support faster, easier, and bigger sales by offering a number of compelling benefits on both sides of the transaction, including:
Hover over each benefit to learn more.
Vendor Benefits
Customer Benefits
Encourages multi-year sales and long-term customer relationships
Helps build larger deals
Makes buying decisions easier...
Offers a competitive advantage...
Increased buying
Less annual budget impact...
Reporting no cost of money...
Customers can bundle...
Five Tips for Using Finance Rate
Buydowns to Win More Opportunities
Hover over each of the tips to learn more.
Less Impact to Cash Flow
Peace of Mind
Bundle Everything
Finance Buydowns
Mention Promotions
Let's Talk
Want to discuss offering your customers low- or no-interest financing? For more on available finance rate buydown options and how a customized promotion from LEAF can help you reach your sales goals, contact your LEAF Account Champion.
Mention the promotion often and in as many places as you can. If you think you're overselling it, you're probably just starting to get through. Reach out to let customers know via email, your website, and social media. Also, be sure to mention it early and often during your sales process.
Mention Promotions
Once you've got their attention, tell them what's in it for them. What's the real benefit of 0% interest? More of what they need to serve customers and grow their business with less impact to cash flow and budgets.
Less Impact to Cash Flow
Don't neglect convenience and peace of mind. Low- or no-interest rate promotions give customers permission to think bigger, which means solutions that do more and solve more of their problems for a longer period of time, especially in the case of multi-year solutions. That means less hassle and less decision-making, which can be huge benefits for any customer who'd rather stay focused on meeting the needs of a quickly
changing marketplace.
Peace of Mind
Use finance rate buydowns to direct customer attention where you want it. Need to clear out some older but still useful technology? Offer financing with a special low rate just for those solutions. Want to promote a new line of products or services?
A targeted, limited-time promotion can help get
early adopters on board now and pave the way for stronger sales to the rest
of your customers.
Finance Buydowns
Bundle, bundle, bundle.
The more hardware, software, and services you can pack into a promotional financing agreement, the better your customer feels about the value proposition of their financed solution. That not only streamlines your sale today, but it also helps ensure a customer who will come back to you when it's time for the next solution.
Bundle Everything
Helps build larger deals
Makes buying decisions easier and often eliminates many hurdles in the procurement process
Offers a competitive advantage that can quickly and strategically be deployed as market conditions warrant
Increased buying power with
less cash flow impact
Money-saving multi-year agreements with less annual budget impact
Reporting no cost of money can be very important to CFOs, investors, and shareholders
Customers can bundle hardware, software, and services to get everything for a monthly cost that’s predictable and affordable
Encourages multi-year sales...
At this point, you may ask yourself, “What’s the advantage to my customer if they’re paying the same as they would with standard financing?”
Good question. The answer is that frontend buydowns aren’t about saving money — they’re about simplifying procurement. By giving your customer the option to finance at 0% interest, you allow them to eliminate many hurdles in a procurement process that can involve getting buy-in from financial officers, investors, shareholders, and other stakeholders who appreciate the advantages of a multi-year solution but have concerns about the impact to financial statements.
A Note on Frontend Buydowns
$50,000
Vendor Product Cost
to Customer
(Minus Sales Tax)
$5,000 Cost to Buy Interest
Down to 0%
$5,000 Short Paid Amount
$45,000
LEAF Issues Purchase Order to Vendor
$5,000
Original Profit on Order Was $10,000 — After Subsidy Profit
Is $5,000
Backend Buydown
Example
The most common form of buydown, backend buydowns, offers customers a reduced interest rate funded by the vendor. In a backend buydown, your finance partner pays you the amount quoted to your customer minus the cost to buy down interest. Here's an example:
To learn about frontend buydowns, click on the frontend buydown button above.
A Note on Frontend Buydowns
At this point, you may ask yourself, “What’s the advantage to my customer if they’re paying the same as they would with standard financing?”
Good question. The answer is that frontend buydowns aren’t about saving money — they’re about simplifying procurement. By giving your customer the option to finance at 0% interest, you allow them to eliminate many hurdles in a procurement process that can involve getting buy-in from financial officers, investors, shareholders, and other stakeholders who appreciate the advantages of a multi-year solution but have concerns about the impact to financial statements.
Hover over each benefit to learn more.
Click the tabs below to learn more about the difference between a frontend and backend buydown.
Increased buying
ower...
Increased buying power...
Terms and Conditions: All applications are subject to credit approval. For different payment durations, deferrals, frequencies, and/or dollar amounts, please call or email for pricing. This promotion cannot be combined with any other LEAF promotions. LEAF reserves the right to void or change its promotion without prior notice. LEAF finances equipment only for business purposes and not for personal, family, or household use.