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In House Finance Definition : What It is Exactly?



In house finance : In-house financing is when a company gives its customers a loan so they can buy its products or services.

In-house financing eliminates the need for the company to rely on the financial sector to provide funds to a customer to complete a transaction.

When a retailer extends a loan to a customer for the purchase of its goods or services, this is known as in-house financing.


What Is In-House Financing and How Does It Work?

in house financeIn-house financing eliminates the need for banks or other third-party lending institutions.

When you get financing from a retailer, getting approved for a loan is usually easier and the process is shorter.

One of the most common industries to use in-house financing is the automobile industry.

Point-of-sale financing has become more popular as a result of the rise of technology companies and mobile apps.

Getting a Glimpse of In-House Financing

Many retailers offer in-house financing to make the purchasing process easier for their customers.


To service a loan for their customers, retailers must either have an established lending business within their company or partner with a single third-party credit provider.

Consumers benefit from in-house lending because they can usually get a loan from the company even if they couldn’t get one through traditional financing channels like a bank.

In-House Financing in the Automobile Industry

Because its business relies on buyers taking out auto loans to complete the purchase of a vehicle, the automobile sales industry is a frequent user of in-house financing.

Offering in-house financing to a car buyer allows a company to complete more deals by accepting more customers.


Automobile dealers also have the advantage of being able to set their own underwriting standards, which can sometimes accommodate a larger number of borrowers by allowing for lower credit score acceptance.

In many cases, these lending platforms will accept borrowers who would otherwise be turned down for a loan by banks or other financial intermediaries.

Equipment manufacturers, appliance stores, and e-commerce retail stores are examples of industries that offer in-house financing.

Technology and In-House Financing

Many borrowers now have more in-house financing options thanks to the emergence of new financial technology companies that offer faster and more convenient point-of-sale credit platforms.


Point-of-sale Credit technology can be built around a company’s in-house credit department or can be simplified when a company partners with a single credit provider to meet their customers’ lending needs.

Affirm, for example, is a fintech company that operates one of the most popular point-of-sale platforms, partnering with thousands of retailers to provide instant financing.

Customers benefit from point-of-sale financing because it streamlines the lending process by allowing them to apply for credit when they are ready to buy.

Customers can get a credit decision from the retailer in minutes, making credit more convenient.


Retailers can also close deals faster with point-of-sale financing. Companies that implemented point-of-sale financing saw a 32 percent increase in sales.

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