Everything you need to know about offering finance to customers.

Why point-of-sale finance matters in 2025

Offering finance at checkout is no longer a nice-to-have. In the UK, consumer credit is forecast to grow by around 7% in 2025, with new business hitting the highest levels since early 2025. September alone saw an 8% year-on-year lift in new business, led by credit cards and personal loans, even as store and online credit slipped slightly. For retailers, that signals clear demand for thoughtfully structured credit that fits household budgets and offers clarity from the first click to the final payment.

Understanding APR is not just about percentages - it is about what your customer will pay in real terms. When affordability is transparent, people make better decisions and repay with confidence. That is why finance at the point of sale works best when it is simple, fairly priced, and communicated in plain English.

The backdrop matters. Inflation looks to have peaked and rate cuts are widely anticipated, yet many households remain cautious because of expected tax rises in the upcoming Budget. Outstanding balances are still rising, up roughly 5.6% year-on-year by March 2025, with credit card borrowing up 4.5%. That mix - optimism tempered by caution - rewards retailers that offer flexible terms, sensible credit limits, and solid pre-contract explanations.

Fintech is doing the heavy lifting behind the scenes. UK innovators use big data and modern risk models to make instant decisions, personalise terms, and improve inclusion for customers who have thin files but reliable behaviours. For merchants, that means faster checkouts, fewer drop-offs, and higher approval rates without loosening standards. It also means better marketing attribution, stronger KYC, and audit-ready records to keep you compliant.

Kandoo is a UK-based retail finance broker. We connect retailers and service providers to a panel of lenders across personal loans, instalment credit, interest-free options, and specialist products like second-charge for larger projects. Our role is to help you offer the right finance to the right customer, with a journey that meets FCA expectations and protects your brand. When finance feels fair and frictionless, conversion lifts, average order values climb, and returns become more predictable.

The goal is not to sell debt. It is to make essential purchases affordable, transparent, and sustainable.

Who benefits from offering finance

Retailers with mid to high ticket items see the biggest lift. Think home improvements, furniture, e‑bikes, consumer tech, dental and veterinary care, and automotive repairs. Where cashflow is a barrier, finance unlocks demand without forcing discounting. Service businesses also benefit, particularly where staged payments align with delivery milestones. If your customer asks about split payments, instalments, or interest-free periods, finance is already part of their decision-making. The winning strategy is to present options early, price them clearly, and guide customers through affordability checks with empathy and precision.

Key terms explained

• APR - The annual percentage rate that summarises borrowing cost, including interest and most fees, so customers can compare like-for-like.

• Representative APR - The rate that at least 51% of accepted applicants will receive. It is not guaranteed for everyone.

• Fixed vs variable rate - Fixed stays the same over the term. Variable may change with market rates.

• Term - The length of the loan or credit agreement, typically 6 to 60 months for retail finance.

• Deposit - An upfront payment that reduces the amount financed and can cut the monthly cost.

• Eligibility - Whether a customer meets criteria set by the lender, based on credit file, affordability, and risk rules.

• Soft search - A preliminary credit check that does not impact a credit score. Useful for pre-qualification.

• Pre-contract information - Mandatory disclosures that explain costs, risks, and rights before the customer signs.

• Cooling-off period - Time after signing when the customer may withdraw, subject to rules in the Consumer Credit Act.

The main ways to structure customer finance

1. Interest-free instalments

   • Customer pays the same amount each month, at 0% APR for a set term. Retailer or lender may subsidise cost. Best for promotional campaigns and seasonal buys.

2. Low-rate fixed loans

   • Personal loans with competitive fixed APRs over 12 to 60 months. Good for higher-ticket items where 0% is not viable. Predictable payments help budgeting.

3. Buy now, pay later with deferral

   • Short deferral then instalments. Useful for urgent purchases where immediate cash is tight. Requires clear communication of deferred interest rules.

4. Revolving credit lines

   • Reusable credit facility for ongoing purchases. Increases loyalty but needs tight controls and clear minimum repayments to prevent persistent debt.

5. Specialist secured options

   • For large home projects or vehicle-related needs, second-charge or hire purchase may fit. Typically longer terms and stricter affordability checks.

What it costs and how it pays back

Who is likely to qualify

Eligibility rests on affordability, credit history, and stable circumstances. Lenders assess income, outgoings, existing commitments, and recent credit behaviour. A strong track record of on-time payments and sensible utilisation helps. Thin-file customers may still qualify if transaction data or open banking evidence supports affordability. For higher ticket items, expect more documentation and tighter limits. Retailers should not promise approval but can reassure customers that a soft search will not affect their score. Clear pre-contract information, fair treatment of vulnerable customers, and signposting to guidance resources are essential to meet UK rules and build trust. When in doubt, document conversations and keep disclosures simple and consistent.

From browse to approved in a few steps

1. Present finance options early on product and checkout pages

2. Run a soft search to gauge eligibility and likely rates

3. Show total cost, APR, and monthly repayment clearly

4. Capture affordability data and verify through open banking if needed

5. Provide pre-contract information and pause for understanding

6. Customer e-signs, lender pays retailer, order is fulfilled

Upsides and trade-offs at a glance

What to check before you launch

Take time to map the journey. Use customer-friendly language for APR, total payable, and cooling-off rights, and ensure staff can explain differences between 0% and low-rate loans. Calibrate eligibility messaging to avoid over-promising, and agree a fair returns policy with your lender so settlement timing and clawbacks are understood. Test the checkout flow on mobile, where most customers browse, and confirm marketing materials meet FCA expectations for clarity, balance, and prominence of key information. Data handling must be explicit and secure. If you serve vulnerable customers, set a clear escalation path and provide alternatives when credit is not suitable.

If finance is not the right fit today

1. Savings and layaway-style plans - staged reservations with clear timelines can suit predictable purchases.

2. Debit-based instalments - scheduled payments without a traditional credit line, supported by open banking mandates.

3. Invoice and staged billing for services - align payments to milestones to ease cashflow without formal credit.

4. Employer or community schemes - salary-linked savings or credit unions may help specific customer groups.

Common questions, expert answers

Q: Will offering finance hurt my margins? A: It depends on structure. Subsidy for 0% can be offset by higher conversion and average order value. Low-rate options often require no subsidy and still convert well.

Q: How quickly are funds settled to the retailer? A: Typically within 24 to 72 hours after e-sign and any cooling-off or delivery checks, depending on lender policy and product type.

Q: Do soft searches affect my customers’ credit scores? A: No. Soft searches do not impact scores. A hard search and the live account appear only once a customer proceeds and is approved.

Q: What data improves approval rates? A: Clean order data, accurate income and expenditure information, and optional open banking verification. These help evidence affordability and reduce friction.

Q: Is interest-free always better for customers? A: Not always. 0% can be ideal for short terms, but low-rate loans over longer periods may offer lower monthly costs and better fit for budgets.

Q: How do we stay compliant with UK rules? A: Use clear, fair, balanced promotions. Provide pre-contract information, train staff, and keep records. If you are credit-broking, ensure permissions or partner with an authorised broker.

Your next move

Audit your product mix, price points, and customer profiles. Decide where finance adds value without encouraging over-borrowing. Speak to a specialist broker like Kandoo to match lenders, terms, and technology to your goals. Pilot with a defined set of products, track conversion and AOV, then refine messaging. Clarity and consistency win trust and repeat business.

Important notice

This article provides general information, not financial advice. Finance is subject to status, eligibility, and affordability checks. Terms, APRs, and product availability may change. Always review lender documentation and UK regulatory guidance before making decisions.