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Some customer financing programs cost vendors nothing to join, while others charge fees or subsidies. Learn what to check before signing.
A customer financing program can look like an easy add-on: your customer applies for financing, a third-party financing provider handles the credit transaction, and your company gets paid for the sale.
But vendors usually have one important question before adding financing to their website or sales process:
What does it cost us?
The answer depends on how the program is structured.
Quick Answer: Customer financing programs can be free for vendors to join, but “free” should be defined carefully. A program may have no setup or membership fee while still involving transaction charges, promotional rate subsidies, integration costs or customer borrowing costs. Vendors should compare their net payout on each funded sale before deciding.
Yes.
Some third-party customer financing programs charge the vendor no setup fee, monthly membership fee or platform fee for a basic financing relationship. The financing company or intermediary earns its economics elsewhere in the transaction rather than charging the equipment dealer, manufacturer, distributor or other B2B seller simply to participate.
Mehmi Financial Group's current vendor financing program, for example, states that there are no setup fees or membership costs for vendors participating in the program. Mehmi operates as a financing brokerage and intermediary rather than the direct lender, so final underwriting, pricing and funding remain subject to the applicable financing provider.
That does not mean every customer financing program in the market is free.
It also does not mean financing itself is free.
There are three separate economics to understand:
Vendor program cost: What your company pays to offer financing.
Customer financing cost: What the approved customer pays for borrowing or leasing.
Financing-provider economics: How the lender, lessor, broker or platform is compensated for arranging, funding and servicing the transaction.
Keeping those three buckets separate prevents most confusion.
For a broader explanation of how the parties fit together, see Mehmi's Financing as a Service for B2B Companies guide.
There is no universal fee structure.
Two platforms can both advertise “customer financing” while producing very different economics for the seller.
A straightforward referral or vendor-financing program may cost nothing to activate. A highly customized embedded-financing system could involve software, integration or transaction costs. A promotional financing campaign can shift part of the customer's financing cost back to the vendor.
Before signing an agreement, distinguish these potential costs:
The important number is therefore not simply the program's advertised monthly price.
It is your net proceeds from a successfully funded sale.
Vendors considering a more integrated structure can compare that against Mehmi's guides to embedded financing in Canada and white-label equipment financing for dealers.
Because the vendor is not necessarily the source of the financing company's revenue.
Depending on the program, the lender or lessor earns interest, financing charges or lease economics from the approved customer. A broker or intermediary may receive compensation connected with a completed financing transaction. Other providers charge vendors directly or combine several revenue sources.
The exact arrangement should be disclosed in the applicable program documentation.
Consider a simple equipment transaction.
A dealer sells a machine for $100,000.
Instead of accepting $100,000 in cash from the buyer, the dealer introduces the customer to a third-party financing option.
The customer is approved, completes the financing documents and satisfies the required funding conditions.
The financing source then pays the vendor according to the agreed closing instructions.
The customer subsequently makes payments to the applicable lender or lessor.
The vendor therefore does not need to collect $100,000 from the customer over several years.
That separation is one of the fundamental benefits of third-party customer financing. Mehmi's Canadian guide on how to offer customer financing without becoming the lender explains the model in more detail.
No.
A financing program can cost the vendor nothing to join while the customer still pays interest, financing charges, lease payments or other approved costs.
Those are different questions.
Suppose your equipment dealership has no subscription fee and no per-transaction deduction.
Your customer might still finance a $75,000 machine over five years at the rate approved for that business.
The program is free to the vendor from a participation standpoint.
The financing is not free to the customer.
This distinction matters when your sales team presents the program.
Avoid wording such as:
“Free financing.”
Instead, say something closer to:
“Financing options are available, subject to credit approval and applicable terms.”
For Canadian advertising, the Competition Bureau specifically warns that using words such as “free” requires material conditions to be properly disclosed, and the overall impression of the advertisement cannot be misleading.
The same practical principle is useful in the United States: clearly separate the vendor's program cost from the customer's actual credit terms.
This is where vendor economics become more important.
A normal third-party financing program can allow the customer to pay the market-approved cost of financing.
A subsidized program changes that arrangement.
The vendor may contribute money so the customer receives a lower promotional rate, reduced payment or another financing incentive.
This is sometimes called a rate buy-down or rate subvention.
Imagine the normal approved financing rate produces a $2,200 monthly payment.
The vendor wants to advertise a promotion that produces a $1,950 payment instead.
Someone has to absorb the economic difference.
If the financing source will not absorb it, the vendor may have to provide a subsidy.
That can still make commercial sense.
A manufacturer might prefer spending $5,000 subsidizing a financing promotion rather than offering a $10,000 blanket discount to every customer.
But the vendor should calculate the real cost before calling the financing program “free.”
Canadian equipment vendors evaluating branded lease programs can also review how private-label leasing programs for equipment vendors separate the customer experience from the underlying financing relationship.
Consider a U.S. equipment vendor making a USD $75,000 sale.
Assume:
The estimated customer payment would be approximately USD $1,575.14 per month.
Over 60 payments, total repayment would be approximately USD $94,508.38, including approximately USD $19,508.38 of interest.
This is only a mathematical illustration. It is not a Mehmi Financial Group rate, approval or financing offer.
Now compare the vendor economics.
If the program charges no setup fee, no membership fee and no transaction deduction, the vendor could receive the full USD $75,000 purchase price at funding, assuming all closing conditions are satisfied.
Now assume another provider charges the vendor a hypothetical 3% transaction fee.
Three percent of USD $75,000 is USD $2,250.
The vendor's net proceeds would therefore fall to USD $72,750 in this simplified example.
If the vendor expected $10,000 of contribution margin from the equipment sale before financing costs, that $2,250 fee would reduce that contribution to $7,750.
That is why a percentage that looks small on a rate sheet can matter considerably on a high-ticket B2B sale.
Canadian businesses should run the calculation in CAD rather than simply converting this U.S. example. Mehmi's Canadian equipment financing calculator guide can help model customer payments; any vendor-program fees should be calculated separately.
A paid program is not automatically a bad program.
What matters is whether the financing cost produces enough additional profitable business to justify it.
Assume your company normally discounts a $100,000 machine by $6,000 to close a price-sensitive sale.
A financing option that costs the vendor $2,500 but allows the company to maintain the original selling price could potentially produce better economics.
Another vendor may discover the opposite.
If nearly every buyer already has inexpensive bank financing, paying several percentage points on every funded sale could unnecessarily reduce margin.
The right calculation is:
Incremental gross profit from financed sales minus the full cost of providing financing.
Do not measure only the number of applications.
Measure completed sales, vendor proceeds, gross margin after financing costs, approval-to-funding conversion and the amount of administrative work required.
For equipment-intensive sellers, Mehmi's guide to how vendor financing programs work explains why application volume and funded volume are not the same measurement.
Equipment financing introduces an additional issue: the asset itself matters.
A financing provider may review the customer's cash flow, operating history, credit profile and existing debt, but it can also review the equipment's age, condition, expected useful life, purchase price and resale value.
A new CNC machine from an established manufacturer is different collateral from a heavily customized machine with limited secondary-market demand.
The same applies to trucks, construction machinery, medical equipment and industrial systems.
Vendors should therefore ask how their equipment mix fits the financing program before judging it solely on price.
If a “free” platform declines half of the transactions your customers actually need, the program may not be commercially useful.
OEMs and distributors can see the seller-side process in Mehmi's vendor financing program guide for OEMs and distributors. Suppliers selling unusually large or specialized assets can also review the U.S. and Canadian considerations in the mining equipment supplier financing guide.
It can remove much of the customer's ongoing repayment risk from the seller when an independent lender or lessor funds the transaction.
It does not automatically eliminate every risk connected with the original sale.
The vendor agreement may still impose responsibilities relating to:
Read the actual vendor agreement.
Ask specifically whether the arrangement is non-recourse for ordinary customer credit default and under what circumstances the financing provider could seek repayment from the vendor.
Do not assume that “the lender takes the credit risk” means the vendor can never have post-funding liability.
Yes.
A North American sales experience can look similar on the surface while the underlying legal framework differs.
In the United States, Regulation B applies to commercial as well as personal credit. The CFPB's current Regulation B materials expressly identify business credit within its scope. State-specific commercial-financing, brokering, disclosure and security rules may also apply depending on the program and jurisdiction.
Canada should not be treated as the same system with CAD substituted for USD.
Canadian requirements can depend on the province, financing structure, customer type, marketing activity and the vendor's actual role. Secured transactions also use provincial systems rather than the U.S. UCC framework. For example, Ontario's Personal Property Security Registration system allows notices of security interests in personal property to be registered and searched.
A vendor operating on both sides of the border should therefore have each country's program structure reviewed separately.
Start with the contract rather than the sales presentation.
Ask what you pay before the first transaction, what you pay when a transaction funds and what could be charged after funding.
Confirm whether your company is responsible for rate subsidies or promotional programs.
Ask exactly how the vendor payout is calculated.
Determine whether software, white-label branding, API access or CRM integration costs extra.
Understand what happens after a cancellation, refund, fraud claim or customer dispute.
Confirm who handles underwriting, documentation, servicing and collections.
Ask how the financing provider treats new versus used equipment, specialized equipment and customers with different credit profiles.
Finally, confirm geographic availability before advertising financing across every state or province you serve.
A simple financing link can be free.
A sophisticated embedded financing strategy may still require technology, process and compliance investment.
The correct choice is the program that produces acceptable net economics and a workable customer experience, not simply the one with the lowest visible platform fee.
Some are.
A provider may offer a basic vendor program with no setup or membership fee. Others charge platform fees, transaction fees, subscriptions or financing subsidies.
Always review the written program agreement rather than assuming “customer financing available” means there is no vendor cost.
Mehmi Financial Group's current North American vendor-program page states no setup fees or membership costs.
Vendors should still confirm the economics applicable to their specific program, transaction type, country and any customized integration or promotional structure before launch.
Usually the economics are generated elsewhere in the transaction.
Depending on the product, the customer may pay interest, lease charges or other financing costs, and the financing provider earns a return for extending credit. Compensation arrangements vary by lender, lessor, broker and platform.
Do not assume so.
A 0% customer offer often requires someone to absorb the financing cost. That could involve manufacturer support, a vendor subsidy or another promotional structure.
Ask for the actual dollar cost of the promotion before advertising it.
In a properly structured third-party program, the financing provider may assume ordinary customer credit risk after a valid transaction funds.
However, the vendor can still have obligations involving fraud, non-delivery, inaccurate invoices, cancellations or other contractual issues.
Review the recourse provisions in the agreement.
Potentially.
The right structure depends on what the customer is purchasing and how the asset will be used.
Loans generally focus on ownership. Leases require additional attention to ownership during the term, residuals, purchase options, returns and end-of-term obligations.
Do not present the two as interchangeable.
Not automatically.
A slightly more expensive program may be worthwhile if it offers materially better coverage for the customers and equipment you actually sell.
Compare funded-sale conversion, net vendor proceeds, customer terms, administrative workload and contractual risk—not just the headline program fee.
If you sell equipment, technology, commercial systems or other B2B products and want to offer financing, start by understanding the economics before choosing the platform.
Mehmi Financial Group operates as a financing brokerage and intermediary and can help vendors structure a customer-financing workflow and connect qualifying transactions with financing providers.
To discuss your program, be ready to share:
Call 833-863-4644 or contact Mehmi Financial Group to discuss the program structure and applicable financing options.
All financing is subject to credit approval, provider requirements, documentation and product and geographic availability.
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