Ally Financial has announced a new point of sale lending service aimed at helping consumers finance large retail purchases.
With the new service, the bank will offer consumers loans ranging from $500 to $40,000, with repayment periods as short as six months or as long as 60 months.
The service is launching in partnership with Mastercard’s Vyze, a point-of-sale platform that connects consumers to lenders during the checkout process. The announcement comes less than a year after Ally acquired Health Credit Services, which offers point of sale lending for healthcare providers.
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The new partnership stands to benefit both Ally and Mastercard, who will together, "give merchants who want to offer consumers trusted and stable installment loan options a powerful, digital option," said Hans Zandhuis, chief of Ally Lending.
With the move into point of sale lending, Ally is betting that financing retail purchases is the best way to reach young consumers. With Ally’s acquisition of Health Credit Services, the bank largely abandoned an earlier foray into offering credit cards.
Millennials have reported that getting approved for credit cards can be difficult, but that they still want the ability to defer payments on purchases. Meanwhile, 70% of retail consumers in a Business Insider survey noted that installment payments make large purchases less stressful.
Ally stands to benefit from the new service by charging interest rates ranging from 9.99% to 26.99%. The company also hopes that by offering financing options, small businesses using Vyze to process payments will see an increase in retail sales.
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