How to Buck the Trade-Down Tire Trend

Without a grand economic turnaround or a rebate from a manufacturer, tire dealers might feel a bit helpless in  nding ways to make their more-expensive tires  nancially attractive to cash-strapped consumers in the current market.

But they do have access to such a tool — it’s  financing. Whether through a lease-to-own option or a primary, secondary or sub-prime program,  nancing experts say the consumers using their products aren’t trading down to lower-priced tire brands like those shoppers who are paying with cash.

And these providers say a growing number of households with incomes of even $100,000 or more are using these options to buy more-expensive tires. MTD talked to five financing suppliers to weigh in on the current state of the economy and how it’s affecting the market for supplemental financing options. 

MTD: How is the current state of the economy affecting consumers’ interest in secondary financing? Is it driving more customers to your service?

Charles Nance, vice president of business development, Acima LLC: Acima Leasing is not a secondary financing product but a lease-to-own offering allowing access to durable consumer goods with short-term, renewable lease arrangements that can be canceled at any time, without penalty. In the current economic environment, consumers are relying more on financing and lease-to-own transactions to manage rising costs. Millions of Americans have little to no access to credit. Retailers can be prepared for any economic climate by offering lease-to-own as an alternative to financing. We’ve seen a growing demand for flexible lease-to-own options, especially among consumers with less-than-perfect credit and those who prefer an alternative to credit products.

Howard Hambleton, president, American First Finance LLC: The demand for non-prime financing has never been higher, driven by both economic conditions and growing consumer awareness. More customers who once qualified for prime and secondary financing are now exploring below-prime options, leading to increased interest in solutions like American First Finance (AFF).

Additional factors we see driving this shift:

• Tighter prime and secondary lending: Many prime and secondary lenders have tightened approval criteria and raised pricing, partly in response to potential late fee caps. As a result, more consumers are being denied traditional financing and turning to tertiary solutions like AFF. This shift has not only increased application volume but has also brought in higher-credit-quality applicants, leading to better approval rates and higher approval amounts for our merchants.
• Credit card constraints: Below-prime consumers often rely on credit cards, but their options are limited. The average credit line for this segment is $1,700, and by the end of 2024, 97% of these cardholders had maxed out their available credit. With fewer alternative payment methods at their disposal, more consumers are seeking flexible options like payment solutions through AFF.
• Low unemployment supports stronger approvals: The sustained low unemployment rate has led to strong repayment performance and lower charge-offs. This stability enables AFF to approve more customers for higher amounts, driving increased sales and larger tickets.
• Inflationary pressures are keeping demand high: The post-pandemic economic landscape saw wage inflation temporarily outpacing market inflation, but that gap has now closed. As inflation remains high, more consumers are seeking payment options to manage essential purchases — creating a growing need for payment solutions through companies like AFF.

In short, shifting credit availability and economic pressures are driving more consumers to below-prime financing. AFF is well-positioned to support both consumers and merchants by providing accessible, flexible payment solutions in today’s evolving financial landscape.

John Cullerton, chief revenue officer at Snap Finance LLC: Due in part to increased consumer debt, high borrowing costs and uncertainties about the year ahead, many households are exploring secondary financing options. These alternatives can help them manage financial obligations. We know from our proprietary Snap Finance research that 30% of consumers with credit scores less than 670 rely on financing to get the tires or auto repairs that they need. But as day-to-day living costs continue to rise, Snap Finance is seeing more people across all credit types consider secondary financing to keep their cars on the road.

Curtis Howse, executive vice president and CEO of home and auto at Synchrony LLC: There is no question the current state of the economy is impacting consumers’ buying habits. Through Synchrony’s leadership position in the consumer financing industry, we are seeing firsthand how consumers are adjusting their buying habits to fit their budgets. The pressure of inflation has increased costs in nearly all categories, including those costs tied to large-ticket items. As a result, consumers deserve and expect a financing experience that starts with helping them find the best possible affordable solution for their evolving budget.

Synchrony has state-of-the-art technology and flexible payment options that partners count on to solve for the majority of their consumers. If Synchrony can’t approve consumers for one of our many programs or products, we have built a robust network of alternative lenders to ‘waterfall’ them that helps them complete their purchase, thus helping our partners keep that consumer engaged. (Synchrony is a primary lender, not a secondary lender.)

Within the tire industry, we maintain a roster of more than seven lenders that our partners work with and our technology has direct integration available to deliver a seamless experience. Synchrony helps our partners ensure their consumers are being routed to the best possible outcome for the purchase and their budget. Our goal is to ensure every consumer gets the best option every time.

Vicki Turjan, president and chief operating officer at Versatile Credit Inc.: Economic uncertainty and rising costs are pushing more consumers to explore flexible financing options, not just for large purchases such as furniture and electronics, but for everyday essentials, including auto repairs.

We’ve seen a growing number of households earning over $100,000 not only applying for financing but (also) falling into near-prime and no-credit-required categories, meaning that even customers who may not have traditionally relied on financing are now considering it as an option. Dealers already have customers in their shops relying on secondary financing options, even if they aren’t actively asking for them.

For businesses, failing to offer full-spectrum financing means potentially losing customers to competitors who do. However, integrating multiple financing options can be complex and costly. At Versatile we help businesses offer prime, near-prime and no-credit-required financing in a single, seamless flow. Our technology removes friction from the process, ensuring customers can quickly connect with the financing option that fits their needs, without unnecessary declines, multiple applications or a complicated process.

Many times, consumers choose where to shop based on the availability of financing. If they don’t know financing is an option at your shop, they may not even consider it. That’s why we encourage dealers to make financing a visible part of their sales strategy, not just as a last-ditch “save the sale” option, but as a proactive way to drive sales before the customer even arrives. Features like e-commerce prequalification, in-store and online financing promotions, and sending application links during appointment scheduling all help customers feel confident in their ability to access financing before they even step into the shop.

MTD: How is the economy specifically affecting the use of secondary financing in the tire and automotive repair industry?

Nance (Acima): For many consumers, reliable transportation is non-negotiable. However, the cost of maintaining or repairing a vehicle has increased, and more drivers are using lease-to-own as an alternative to financing to get new tires. This shift highlights the importance of accessible options that enable customers to keep their vehicles in safe, working condition without significant financial strain.

Hambleton (American First Finance): Demand for tires and automotive repair remains strong because vehicle ownership is a necessity, not a luxury. With elevated mortgage rates slowing home sales, industries tied to homeownership — such as furniture, appliances, and electronics — have felt the impact. In contrast, the auto service industry is seeing the opposite effect.

Higher auto loan rates are leading consumers to hold onto their vehicles longer instead of buying new. This means more aging vehicles on the road and greater demand for the shops that keep them running — whether for routine maintenance, tire replacements or essential repairs.

For tire and wheel shops, offering proven below-prime solutions through companies like AFF is more critical than ever. As more consumers delay large cash purchases and rely on flexible payment options, shops that provide accessible payment solutions will capture more business and better serve their customers.

Cullerton (Snap Finance): In the last few years, vehicle maintenance and repair costs have increased 28% and the average cost of tires has risen 21%. Auto repairs and tire replacement are rarely convenient. So, when your customer doesn’t have savings to cover an unexpected expense — especially when those costs continue to increase — they might be tempted to skip maintenance or get by with replacing one tire at a time.

Most people need to keep their car running and in good shape to get to work and get where they and their family need be. Uncertainty about what the future holds for the economy or not feeling secure in their jobs can lead many to hold on to savings to cover other future expenses. Dealers that offer secondary financing may be offering a lifeline to those who don’t qualify for traditional financing.

Howse (Synchrony): Tire and auto repair businesses are certainly exposed to the variability in the economy. As consumers find themselves returning to a life of driving back to the office or road trip vacations with their families, they are using their vehicles more and more. AAA shows that miles driven has achieved pre-Covid levels. Consumers are also holding onto their cars longer. The average age of vehicles on the road has peaked at 13 years for the first time ever. These two factors combined are leading to more work for the tire and auto repair industry. Consumers are having to choose between small, mid-sized and large tire and repair businesses to have their needs met. No matter the size of the business, consumers of all credit qualities are walking through the door looking for a great deal and quality service that can get them back on the road safely.

Synchrony has developed capabilities that allow businesses of all sizes to benefit from access to a multi-lender environment, regardless of whether the business has the resources, relationships or technology stack. We work with businesses that prefer to host the solution, and we work with businesses that rely on Synchrony to handle it for them.   

Synchrony has state-of-the art technology and flexible payment options that partners count on to solve for the majority of their consumers. If Synchrony can’t approve consumers for one of our many programs or products, we have built a robust network of alternative lenders to ‘waterfall’ them that helps them complete their purchase, thus helping our partners keep that consumer engaged. For auto specifically, we work with more than seven other lenders that can help consumers looking for additional or alternative credit.

Turjan (Versatile Credit): The impact of rising costs is being felt across all industries, but automotive repairs and tires are unique because they’re often essential. Many times, consumers may not have the cash on hand for an unexpected expense, making financing a necessity rather than a convenience. Even high-income households, including those making over $100,000, are applying for near-prime and no-credit-required options.

For tire dealers, that means there are customers in their shops right now who need financing solutions, whether they realize it or not. A major challenge is that many customers assume they won’t qualify, so they may not even ask about it. That’s where a seamless, full-spectrum financing experience can make the difference.

With Versatile’s technology, customers are automatically guided through the process and matched with the best available financing option. Instead of multiple applications or unnecessary declines, they get a frictionless path to approval, and dealers capture more sales that may have otherwise been lost.

We encourage dealers to lead with financing, especially when it comes to selling upgraded products. Instead of treating financing as a last resort to save the sale, it can be positioned as an opportunity to afford the better, higher-quality options. Many customers would choose a premium tire if they knew they had access to promotional financing options. Without financing, they may opt for the lowest-cost option, even if it’s not the best long-term solution for their needs.

MTD: Consumers have been trading down to lower-tiered tire brands. Do you see evidence of this as well, or is secondary financing a tool consumers are using to buy more expensive and higher-tiered tire brands?

Nance (Acima): While some consumers are opting for lower-tier tire brands due to budget constraints, many are leveraging lease-to-own to get access to premium, brand-name tires. Our average tire lease amount has remained at $1,250 over the past few years, illustrating that customers using Acima Leasing are more likely to select (more expensive) tires than they would if they had to pay the full amount. 

Hambleton (American First Finance): While cash buyers are trading down to lower-tier tire brands, we haven’t seen this trend among AFF customers. Thanks to strong approval amounts, they’re able to purchase the name-brand tires they prefer rather than settling for a lower-cost option.

Tire and wheel merchants that offer below-prime solutions see a noticeable lift in average ticket size compared to those without a flexible payment solution. The before-and-after data is compelling: when customers have access to payment solutions, they’re more likely to choose (more expensive) products.

Beyond approval amounts, several key factors influence whether a customer trades up or down, including initial payment requirements, early savings options and term flexibility. AFF is committed to providing a seamless experience in all these areas, helping tire retailers maximize sales.

Cullerton (Snap Finance): Snap Finance’s research shows that 42% of credit-challenged consumers spend more with financing than without. Offering secondary financing often increases average order values and sales, and when customers are able to drive away with a higher quality product, it ultimately improves their experience with the dealer.

Turjan (Versatile Credit): It ultimately depends on the customer and how financing is positioned within the sales experience. Some customers use financing as a way to afford the lowest-cost option, while others see it as a way to upgrade to (more expensive) tires.

What makes the biggest difference is how the financing process is integrated into the experience. When customers see financing as an accessible, easy-to-use option, it gives them more confidence to select what they actually want and need.

Dynamic application routing, where the application can be tailored based on factors like the total purchase amount, the type of tires being purchased, and even store location, means customers are matched with the right financing amount for their specific purchase increasing conversion rates.

Instead of a one-size-fits-all approach, financing is personalized to fit both the customer’s credit profile and the purchase they’re making.

This reduces situations where customers apply, realize they can’t afford the set they wanted, and have to start the whole process over again.

Another key factor is lender choice, not just in terms of offering different financing products, but also in aligning different financing tiers with the right lender. Many tire shop employees aren’t financing experts. They’re juggling multiple tasks.

Having a solution that automates lender selection and integrates seamlessly into the check-out process takes the burden off staff and ensures customers are presented with the best available financing options for their needs.

Additionally, leveraging mobile-friendly financing options, such as sending application links via text, QR codes or integrating financing into appointment scheduling, further streamlines the process and removes friction. The more streamlined the financing experience, the easier it is for both customers and staff.

By making financing easier to understand and access, dealers don’t just capture more sales, they create a better overall customer experience and make their business a choice for customers who are looking for flexible payment options.

MTD: For a tire dealer looking for an alternative financing provider, what is one thing you offer that makes you stand out from your competitors?

Nance (Acima): Acima Leasing stands out through its seamless lease-to-own model, which enables tire dealers to serve a broader customer base. Our innovative underwriting approach evaluates a variety of meaningful data points, allowing us to approve more customers that may not qualify for credit transactions. Additionally, our simple digital application process, higher approval rates and flexible lease terms make it easier for tire dealers to close sales with Acima Leasing and increase average transaction values. Over 10,000 wheel and tire locations across the U.S. use Acima Leasing to drive revenue and grow their business.

Hambleton (American First Finance): The American First Finance difference: More money, less worry, customized for you.

AFF delivers higher approval amounts, which means more dollars in your account. For every 100 applications submitted, I strongly believe AFF can generate more revenue than any alternative provider. It’s why we say “Welcome to Yesville” — where all credit is welcome, including your customers’.

AFF offers a proven, legally sound and compliant payment solution so you can sleep easy knowing your payment solution provider is stable, reliable and doing right by your customers.

We understand that one size doesn’t fit all. That’s why AFF tailors its offerings to meet your specific needs, ensuring the right fit for your business and customers. We don’t just set it and forget it — we actively seek ways to drive ongoing value and results for you.

Cullerton (Snap Finance): Snap Finance products are offered in all 50 states. As the tire and auto repair industry moves to a more holistic, multi-care approach, it’s important that dealers offer options that allow a customer to finance the “whole ticket,” not just items that are leasable. Snap is uniquely positioned to provide this experience.

Howse (Synchrony): We are uniquely positioned to serve as the one-stop shop for financing options for auto repair shops and tire retailers. Our technology solutions include integrations into a network of alternative lenders. These lenders can play a pivotal role for auto repair shops and tire retailers in expanding the purchase offers for consumers.

Through a direct integration into the Synchrony platform, auto repair shops and tire retailers can maximize their sales and their time by using our singular platform for all their financing needs. This reduces the need to jump from system to system, remembering multiple versions of log-ins and passwords and varying lender details. By leveraging the Synchrony waterfall, auto repair shops and tire retailers can rely on Synchrony to help them get the job done quickly and easily for all consumers.

We offer customers convenient ways to finance their purchases. Our omnichannel activation includes QR codes in service bays, mobile approvals on financing through digital apply technology before they leave the waiting room and our integrated financing through payment processing partnerships with 1stMile or 360Payments.

We’re growth partners, not just financiers. Our dealer partners get free marketing tools through Synchrony Ad Wizard; small business courses on cash flow management through our small business learning center; and real-time sales dashboards on our partner portal. Simply put, we take on the financing complexity so our dealer partners can focus on their customers.

Turjan (Versatile Credit): The biggest thing that sets Versatile apart is that we don’t just provide a financing application, we help businesses build an entire credit strategy.

For most tire dealers, managing financing means juggling multiple lenders, separate approval processes and different back-end systems. Versatile gives dealers a unified, multi-lender experience, allowing them to offer prime, near-prime and no-credit-required financing — all within a single, seamless application flow and checkout experience.

Versatile also provides dealers with a centralized portal where they can monitor approvals, track lender performance and analyze customer financing trends in real-time. This means dealers aren’t just offering financing, they have the tools to optimize the experience. Versatile gives dealers the tools to make better, data-driven financing decisions.

Ultimately, the goal isn’t just to offer financing. It’s to make financing a strategic part of the customer experience that drives conversions, builds loyalty and increases revenue.

When done right, financing removes barriers to purchase, empowers customers to choose the best products for their needs and helps tire dealers maximize every potential sale.