For 15 years, Community Finance has offered consumers more choice through its operations in 46 U.S. states. A financial services firm specializing in consumer installment leases, Community Finance provides lease-to-own options for a wide range of consumer products, giving consumers the chance to shop with their favorite retailers for larger ticket items and pay over time.
What do consumers typically finance?
Consumers turn to Community Finance for installment leases on a wide variety of purchases. These include financing pet purchases and products such as bikes, generators, kayaks, pool tables, jewelry, watches, lawn mowers, yard sheds, home appliances, TVs, computers, and other electronics. Pets represent approximately 30% of all originations, with lawn and garden accounting for another 40%. The remaining 30% of installment leases cover a broad spectrum: from jewelry and electronics to furniture and automotive accessories.
Who are Community Finance’s customers?
Community Finance operates in the tier 2 (near prime) segment, catering to customers with ‘near prime’ and ‘subprime’ credit scores. In 2022, the average purchase amount of an originated lease was approximately $4,600. Leases are available for amounts from $200-15,000.
How to make a match
The majority of Community Finance’s lease applications are sourced via Terrace Finance. Prospective customers fill out a single application to gain access to Terrace Finance’s multi-lender network, which includes Community Finance. Credit applications that meet Community Finance’s predetermined criteria are routed to the firm for review.
Consumers also have the option to apply upfront for financing via Community Finance’s site. Once approved, they can shop at their favorite stores or access Community Finance’s network of retailers.
The path to underwriting approval
Ultimately, Community Finance originates leases for the approximately 15% -20% of credit applicants who meet their stringent requirements. In addition to credit scores, approval depends upon providing appropriate documentation* from the applicant that demonstrates:
- The applicant is over 18 years of age;
- Has 12 months or more with the current employer;
- Has 3 months with an active, open checking account; and
- Earns $1,300 in net income per month, after tax and deductions. Considered incomes may be combined to meet the minimum requirements.
Identity verification and residency checks are also completed as part of KYC requirements.
Given Community Finance’s focus on the near- and mid-prime sector, customers with prior bankruptcy records may still qualify for an installment lease depending on the timing of the bankruptcy vis-à-vis their application.
A pricing calculator is used to determine the maximum approval amount based on income. Before making a final underwriting decision, Community Finance analyzes payment history to determine the likelihood of payment vs. non-payment. Other factors include the average age of collection accounts, the overall amount of the applicant’s debt, the proximity of unsecured account balances to the credit limit amounts, and whether payment history appears to have improved if historical delinquencies were noted.
The value for consumers
Community Finance gives consumers the ability to acquire and use the products they want while they make recurring payments on those products. Before applying, consumers can use an online calculator to evaluate both payment and total costs. There are no application fees and no obligation, and Community Finance commits to fast decisions.
The firm focuses on structuring consumer-friendly leases. Term lengths are structured to keep payments low, payments can be scheduled automatically and for specific timeframes, and consumers can save money by paying a lease off early with no prepayment fees. Additional benefits such as quick decisions, ‘same as cash’ options, low first payments and ‘skip a payment’ option are explained in detail on the Community Finance website.
Until a lease is signed, the consumer is under no obligation to Community Finance. Once the lease is signed and the consumer makes all payments according to the terms, they own the item(s) financed.
*As of May 2023