How Contractors Can Help Their Customers Find Financing Options

One of the problems with contracted jobs is the cost. Now really, the cost isn’t the actual problem, it’s the sticker shock your customers get when they find out how much their project will cost. They simply aren’t prepared to face a $10,000 or $20,000 (or more) price tag and immediately have second thoughts.

Contractor

So what can you do about this? One way to help is to make it clear there are ways to finance the job available and you can help them use one of them. Then when you get to the price tag you can fill them in with some of those options. Instead of “This job will cost you $25,000” you can say “There are several options on how you can pay for this job.” Then list out the monthly payment at a specific interest rate, a part cash/part financed option, and finally the cost if they want to pay all up front. Just reordering these can relax your customers and let them consider their options more objectively.

So how can you help your customers with financing? There’s a few different ways.

Information on Bank Loans

The first and most obvious place to borrow money is from a bank, credit union or some other traditional lender. As a contractor, you can provide information about how the bank loan process works and some of the alternatives they can consider. Giving them an estimate and any key information about securing a bank loan for a contracting project is helpful, as is informing them about the differences between personal loans, home equity loans, revolving credit, credit lines, and term loans.

There are a lot of different options, but some take more time than others, and to get the best rate takes the most time and effort. Many customers may not realize just how difficult it is to get a ‘good’ loan from a bank. If this sounds discouraging you can move on to other options.

Guidance to Specialty Lenders

There are a number of lenders who are specializing in various types of loans. One example is Hearth financing who has a special program just for contractors to help their customers finance home improvement projects. They enable you to have a branded financing page for your business where customers can quickly and easily get quotes to compare to any other options they’ve been investigating. You are notified when they’ve got their quote so you can discuss options with them immediately. The pre-qualification gives you much more ‘firm’ numbers to work with. Once your customers applies for a loan and is accepted, Hearth’s quick turnaround means they could be funded in as little as 24 hours.

While there are a number of other services which you can work with, finding a reliable one which then has a number of lenders available to make offers (Hearth has eleven loan providers they work with) makes it easier to deal with. Signing up takes very little time and co-branding the page for your business makes it a very personal experience for the customer. They only have to deal with you, the contractor, while you only have to deal with a single financing company.

Business financing

Inhouse Financing

While it is possible for your company to offer inhouse financing options, you are usually best served working with a lender or company that finds lenders rather than handling it yourself. Setting rates, checking credit, and in the event of delinquency or non-payment, performing collections are all well outside your central business of contracting.

In most industries, sticking to your core competency and using business partners to provide services outside of those works best. The same goes for contracting. But working with a finance company that allows you to offer personalized financing has all the advantages of doing it inhouse. Choose one that partners with you rather than appearing as an outside agency.

Now that you know how to walk your customers through financing options, you can consider some of the advantages working this way has. If you customer has money up front for the job, financing can allow them to expand the job to include more extras, or even additional projects, with a relatively small extra expenditure. If they are approved for more money than they expected, or the job was originally estimated for, they might be interested in higher quality components or additional work they’d decided was ‘too expensive’.

Once you are using a financing option, the difference an extra $5,000 in the total cost makes is very small on a monthly payment. Your customer may be very interested in something but thought they couldn’t afford it. Financing it over months or years at a reasonable interest rate can put these projects in reach again.

So make sure your customers know up front you can help them with financing and you might make more sales, and have more satisfied customers, than you ever thought possible.

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