What is the best way to offer finance to customers in the UK?

The state of UK customer finance in 2025

The UK consumer credit market has regained momentum, and that matters if you are deciding how to offer finance at checkout. New business is tracking 7% growth in 2025, a signal that credit is once again supporting essential purchases as inflation cools and rate cuts are anticipated. At the same time, households remain careful. Nearly three in five expect their finances to improve over the next six months, yet most still prefer to spend cautiously. The implication is clear: customers want flexibility, but they also want control.

Credit cards and personal loans are leading the recovery, with new business up around 6%, while retail store and online credit has fallen by roughly 5%. This shift points to products perceived as transparent and manageable winning out over legacy store plans. Second charge mortgages have risen strongly year on year, especially for larger home improvement projects, where spreading cost over a longer term can be sensible. If you sell higher ticket items or home services, this change is material.

Digital behaviour is the other decisive trend. Digital banking usage has surged across generations, led by Gen Z, but with meaningful adoption among millennials and an uptick from Gen X and boomers too. Embedded finance - credit integrated neatly into the customer journey - is now expected. Where the application is fast, mobile friendly and clear on costs, conversion rises and basket abandonment falls. That is why brokers and lenders are investing in AI decisioning, identity checks and affordability tools that reduce friction without compromising security.

Buy Now, Pay Later has broadened beyond budget-conscious shoppers. The appeal is simplicity and short-term flexibility, with notable take-up even among higher income customers for devices and lifestyle purchases. Yet BNPL is entering a more rigorous era. With the FCA’s Consumer Duty foregrounding good outcomes, firms must prove products are suitable and affordable, and that vulnerable customers are protected. Clear language, representative APRs where relevant, and robust affordability checks are not optional - they are the bar.

Sustainability also matters. Around one in five UK consumers now holds at least one sustainable finance product. If your brand positions around ethical choices - energy efficiency, repair over replace, greener upgrades - finance that aligns with those values can differentiate, not just defer cost. Meanwhile, savings balances remain healthy, suggesting many households could pay outright but prefer optionality. Offering finance does not replace cash buyers; it helps the hesitant say yes with confidence.

Kandoo is a UK-based retail finance broker. Working with a broker can help you match customer profiles to appropriate lenders, blend products such as 0% promotional credit and longer-term fixed-rate loans, and keep your journey compliant with UK regulation. The best way to offer finance is the approach that fits your price points, margins, risk tolerance, and customer expectations - and that can be proven fair, affordable and clear.

Understanding APR is not just about percentages - it is about what your customer will pay in real terms and how predictably they can budget.

Bottom line: Offer finance where it removes friction, keep costs and terms transparent, and use digital-first journeys that respect Consumer Duty while lifting conversion.

Who benefits from getting finance right

If you are a UK retailer, tradesperson, clinic, or home improvement firm selling mid to high value items, point-of-sale finance can move customers from browsing to buying. It helps where affordability, not desire, is the blocker - think boilers, dental treatments, e-bikes, furniture, solar panels and home upgrades. Customers with healthy savings may still prefer to spread cost to maintain buffers, especially in a cautious climate. For online-first brands, embedded credit can close the gap between interest and checkout completion. For regional businesses, finance options can ease local disparities in access to credit by broadening lender reach. Whatever your model, the winners make finance simple, ethical and quick, with reliable approvals and clear messaging.

Jargon, decoded

• Representative APR - the rate that at least 51% of accepted customers are expected to receive for a given credit product.

• Soft search - an eligibility check that does not affect a customer’s credit score and is invisible to other lenders.

• Affordability assessment - a check on income, debts and expenditure to ensure repayments are sustainable.

• Point-of-sale loan - a fixed-term loan offered at checkout, often with 0% or low fixed rates.

• BNPL - short-term instalments, often interest free, typically for smaller baskets and shorter durations.

• Embedded finance - credit integrated into your website or store systems so customers apply within your journey.

• Second charge mortgage - secured lending on a property, often used for larger home improvements.

• Consumer Duty - FCA rules requiring fair value, good outcomes, and protection for vulnerable customers.

• Early settlement - paying off finance before the term ends, sometimes with interest rebates as per terms.

• Eligibility criteria - lender rules on credit score, income, employment and residency required for approval.

Your finance playbook

1. Brokered point-of-sale loans - Partner with a UK broker to access multiple lenders, offer promotional 0% on selected baskets, and provide fixed-rate terms for larger purchases. Good for clarity and regulated compliance support.

2. BNPL with clear guardrails - Offer short-term instalments for lower ticket items where customers value speed. Implement robust affordability checks and clear late fee policies to meet Consumer Duty expectations.

3. Subsidised 0% promotions - Use marketing budget to buy down the APR for customers. Ideal for seasonal campaigns or product launches where conversion and average order value are priorities.

4. Longer-term personal loans - For mid to high value purchases, integrate application flows that provide instant decisions and stable monthly payments over 12 to 60 months.

5. In-house instalment plans - For very small baskets or loyal customers, consider simple staged payments. Keep terms documented, reconcile diligently, and understand the credit risk you retain.

6. Leasing or subscription models - For equipment or tech, provide access rather than ownership, with upgrade paths and predictable monthly fees.

7. Home improvement secured options - For significant projects, offer access to second charge lending via a regulated partner where appropriate affordability is established.

What it costs and what you gain

Who is likely to qualify

Lenders will look at a customer’s credit history, income stability, existing commitments and verified identity. Soft searches can indicate eligibility without leaving a mark, with full checks only when the customer proceeds. For 0% promotions, you may see strong uptake from prime and near-prime profiles if the journey is seamless and the repayment schedule is transparent. BNPL suits smaller baskets where affordability is clear and short-term. For larger purchases, fixed-term personal loans with predictable monthly payments tend to suit customers who value stability over flexibility. If a home improvement project is substantial, secured options may appeal to homeowners with sufficient equity and a track record of reliable repayments.

Merchants should also consider their own eligibility and obligations. If you introduce customers to credit, you may need appropriate FCA permissions or to act as an appointed representative of an authorised firm. You will be expected to evidence fair value, monitor outcomes, and support vulnerable customers. Robust disclosures, clear presentation of representative APRs, and accessible customer support are essential. Regional access gaps remain in parts of the UK, so partnering with a broker that works across a panel can help improve approval coverage fairly.

From plan to live in a week

1. Define price points, products and eligible baskets.

2. Select a broker and lender panel fit.

3. Map journeys and compliance disclosures.

4. Integrate APIs and configure decisioning rules.

5. Test soft search and full application flows.

6. Train staff on scripts and vulnerability flags.

7. Launch with a targeted 0% campaign.

8. Monitor approvals, outcomes and customer feedback.

The upsides and trade-offs

Read this before you switch on finance

Clarity wins trust. Publish representative APRs, total amounts payable and example costs. Keep affordability front and centre, with clear support for customers who need extra help. Ensure your terms handle returns and early settlements without surprises. Avoid offering finance on unsuitable baskets where short lifespans or high return rates create disputes. Protect data with strong security and keep fraud checks invisible but effective. Align finance messaging with your brand values - if you promote sustainability, consider financing that rewards efficient or repair-first choices. Finally, pilot before scaling. A focused trial reveals the right mix of products and promotional spend without risking margin across your entire catalogue.

If finance is not the right fit today

1. Encourage card instalments via issuer plans and let customers use their bank’s options.

2. Offer deposit and lay-by structures for small local purchases with clear timelines.

3. Promote savings-based discounts for upfront payment while keeping optionality.

4. Signpost community or credit union lending where appropriate for essential purchases.

5. Provide refurbished or rental alternatives to lower upfront cost without credit.

Frequently asked questions

Q: Will a soft search affect my customer’s credit score? A: No. Soft searches check eligibility without leaving a visible footprint to other lenders. A full application will appear on the customer’s file.

Q: Who pays for 0% finance promotions? A: Typically the merchant funds the APR reduction as a marketing cost. The trade-off is higher conversion and average order value.

Q: How fast can customers get a decision? A: With embedded journeys and AI decisioning, instant decisions are common. Complex cases may require manual review, usually within hours.

Q: Is BNPL regulated in the same way as loans? A: BNPL is moving toward tighter oversight. Regardless, you should apply Consumer Duty principles now and ensure affordability and clear disclosures.

Q: What if a customer returns goods purchased on finance? A: The loan is adjusted or cancelled according to terms. Ensure your returns policy explains how refunds interact with finance settlements.

Q: Can we offer green or ethical finance options? A: Yes. Demand for sustainable finance is growing. Highlight products that support energy efficiency or repairs and work with lenders who share that focus.

Make your first move

Start with a small, high-intent product set. Use 0% selectively where margin allows, and pair it with fixed-rate options for bigger baskets. Work with a UK broker such as Kandoo to access a lender panel, run soft search eligibility, and keep your journey compliant and customer friendly. Review metrics weekly and iterate.

Important information

This guide is for general information only and is not financial advice. Finance is subject to status, affordability and terms. Consider obtaining independent advice and ensure your activities comply with FCA requirements, including Consumer Duty responsibilities.