How Financing Can Help Hot Tub Retailers Drive More Sales

Why Offering Finance Makes a Difference

For many UK consumers, buying a hot tub is a significant investment. By providing accessible financing solutions, hot tub retailers can lower the barrier to purchase, appeal to a wider audience, and ultimately increase sales. In a competitive market, offering finance isn’t just an added benefit—it can be a crucial differentiator.

Who Can Benefit from This Approach?

Retailers looking to grow their customer base, improve cash flow, and offer greater flexibility will find financing especially valuable. It’s also ideal for consumers who want to spread the cost of a luxury purchase while staying within their monthly budget.

Key Terms to Understand

Before implementing or promoting finance options, it’s important to be clear on the core concepts:

• APR (Annual Percentage Rate): The total cost of borrowing, including interest and fees, expressed as a yearly rate.

• Interest-Free Credit: A type of finance where the customer pays no interest, if payments are made on time.

• Deferred Payment Plans: Customers can start paying after a set period, often 6–12 months.

• Retail Finance Broker: An intermediary (such as Kandoo) connecting retailers and customers with finance providers.

These terms help both retailers and customers understand the real costs and structure of the agreements they’re entering.

Financing Options for Hot Tub Retailers

A variety of finance products are available, each with distinct advantages:

• Interest-Free Credit: Customers pay the retail price in instalments, without added interest. This is attractive for those wary of extra costs.

• Buy Now, Pay Later: Payment starts after a set period, ideal for customers who want time to plan their finances.

• Personal Loans: These allow customers to borrow a lump sum and pay back over a longer term, potentially with lower monthly payments.

• Hire Purchase: The customer makes monthly payments and owns the hot tub after all payments are complete.

• Point-of-Sale Finance: Quick credit decisions at checkout, making the buying process smoother and more immediate.

Retailers can choose to partner with finance brokers to access a suite of lenders and tailor offerings to their customer base.

Costs, Impacts, and Risks

While finance solutions can boost sales, it’s important to consider the costs and risks:

• Merchant Fees: Retailers may pay a commission or fee to the finance provider, which can affect margins.

• Credit Risk: Although the finance provider carries the lending risk, defaults can impact customer relationships and reputation.

• Regulatory Requirements: Retailers must comply with Financial Conduct Authority (FCA) guidelines when offering finance.

However, the positive impact on cash flow—retailers are typically paid in full upfront by the lender—often outweighs these costs.

Eligibility, Requirements, and Conditions

To offer finance, retailers usually need:

• FCA authorisation or an appointed representative arrangement.

• A partnership with a regulated finance broker or lender.

• Transparent marketing and sales processes to ensure customers understand terms.

Customers must meet certain criteria, typically:

• UK residency

• Age 18 or over

• Sufficient credit rating

Step-by-Step: How Retail Finance Works

1. Customer selects a hot tub.

2. Finance option is offered at checkout.

3. Customer completes a finance application.

4. Credit check is performed by the lender.

5. Approval decision is made, usually instantly.

6. Customer signs agreement electronically.

7. Retailer receives payment from lender.

8. Customer repays lender in agreed instalments.

Pros and Cons to Consider

Pros:

• Increases sales by making products more affordable.

• Attracts customers who prefer to spread costs.

• Improves cash flow for retailers.

Cons:

• Merchant fees may reduce profit margins.

• Compliance requirements add administrative overhead.

• Customers taking on debt may face financial strain if not managed carefully.

The key is to balance accessibility with responsible lending and clear communication.

What to Watch Out For

• Transparency: All terms and costs must be clearly disclosed to customers.

• Marketing Claims: Avoid misleading statements about finance being ‘free’ if fees or charges apply.

• Regulations: Stay up to date with FCA rules to avoid penalties or reputational damage.

• Customer Affordability: Finance should help customers, not encourage unsustainable borrowing.

Consider regular training for staff to ensure compliance and high service standards.

Alternatives to Retail Finance

If retail finance isn’t the right fit, retailers can consider:

• Traditional Credit Cards: Customers use their own credit facility to pay.

• Layaway Schemes: The customer pays in instalments before delivery, avoiding credit checks.

• Discounts or Seasonal Offers: Attract cost-conscious buyers without the need for finance.

• Leasing: For commercial clients, leasing may offer flexibility and lower upfront costs.

Each alternative comes with its own pros and cons, but retail finance remains a popular choice for high-ticket items.

Frequently Asked Questions

1. Will offering finance affect my business credit rating?

No, as a retailer, using a finance broker does not impact your business credit score. Only customers applying for finance are subject to credit checks.

2. How quickly do retailers receive payment?

In most cases, payment is received within a few days of the finance agreement being signed, improving cash flow compared to traditional layaway or payment-by-instalment plans.

3. Do I need FCA authorisation to offer finance?

Yes, or you can work with an authorised finance broker who can act as an appointed representative, ensuring compliance with regulations.

4. Can customers make overpayments or settle early?

This depends on the lender, but many finance agreements allow for early settlement, sometimes without penalty.

5. Are there restrictions on what products can be financed?

Typically, finance is available for new hot tubs, but terms may vary by lender.

6. What happens if a customer misses a payment?

The finance provider manages collections and customer communications, but missed payments can affect the customer’s credit score.

Next Steps for Retailers

If you’re considering offering finance in your hot tub business, start by researching regulated finance brokers or lenders, review the FCA guidance, and seek professional advice. Providing clear, transparent finance options can set your business apart and support sustainable growth.

Disclaimer

This article is for informational purposes only and does not constitute financial advice. Retailers should consult with a regulated finance broker or adviser before offering finance products to customers. Terms and eligibility criteria apply.