In its most basic terms, retail finance is a loan. A retail finance loan offers either payment instalments or credit facilities to a company’s customers that have a good credit rating. Retail finance allows a customer to spread out the cost of a purchase, which makes it both easier to afford and also encourages the customer to make the purchase in the first place. This cost is spread out either by a store card (essentially a credit card that can be used only for the specified retail company), or through a financing plan set up during purchase and covering an allotted period of time.
What are Retail Finances?
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The retail supply chain generally consists of four players: manufacturers who produce the goods, wholesalers or distributors who buy from manufacturers and resell to retailers, and retailers who buy from wholesalers and then sell to consumers. At each step in the chain there is a markup, or profit margin, built in to the purchase. Manufacturers calculate their cost of making a product and then add on a profit percentage before selling to wholesalers. Wholesalers do the same thing, adding a profit percentage to what they paid for the products. And retailers add their own profit margin to the cost of the product before selling it to their end customer, the user.