Flexible payment options are essential to closing home improvement jobs. They mitigate sticker shock, help increase project values, and expand your potential client pool. But financing programs aren’t universal. They come in a range of structures with trade-offs that affect the customer experience and your bottom line.
Finding the right consumer financing partner for home improvement contractors is critical to ensuring financing increases sales and revenue as intended. Read on for an explanation of home improvement financing programs and what to look for in a partner for your business.
How Consumer Financing Programs Actually Work
The basic mechanics of most consumer financing programs are similar: the lender extends credit to the homeowner, and the contractor is paid, and the consumer makes repayment over the life of the loan to the financing company. The nuance lies in the more technical aspects of a financing program, specifically promotional rates and dealer fees.
By working with United Consumer Financial Services, home improvement businesses can take full advantage of financing programs built to serve both the company and their clients. We offer payment structures that can be adjusted to meet your needs, helping you achieve your goals. Our flexible financing programs and structures are explained in detail below.
Common Financing Rate Structures
Understanding UCFS’ core financing rate structures, from short-term interest-free plans to longer fixed-rate loans, helps contractors match the right option to each customer’s needs (and close more sales).
- Same-as-Cash Plans: Same-as-cash promotional financing makes purchase decisions easy. Instead of asking customers to pay the full price upfront, home improvement contractors can offer 12-month interest-free payment plans, provided the balance is paid in full within that window. For the customer, same-as-cash facilitates a near-immediate “yes” decision, especially for high-value projects. For businesses, a same-as-cash promotion opens the door to a wider pool of buyers, including many who would have walked away, shopped elsewhere, or settled for a downgrade if interest-free payment were not an option.
- Fixed APR Installment Loans: Fixed APR installment loans give homeowners an affordable, predictable path to bigger projects. Rather than requiring a lump-sum payment, businesses can offer extended payment terms at a locked interest rate for the life of the loan. For the customer, a fixed rate and consistent, affordable monthly payment turn a major project into a manageable line item in the budget with no risk of a rate hike mid-loan. For contractors, fixed APR options extend affordability to bigger-ticket jobs, helping customers who need options beyond cash or credit, or more time to pay than a same-as-cash plan allows, but still want the certainty of a payment that won’t change.
Adjusting Dealer Fees Based on Individual Goals
United Consumer Financial Services empowers contracting companies to customize risk tolerance through flexible fees, ensuring their financing program supports their marketing, sales, and growth strategies. Contracting companies opting for a low-risk approach can choose to pay a lower percentage fee, prompting UCFS to be more conservative in customer approvals and reducing the risk of consumer loan defaults. Home improvement businesses prioritizing high volume can choose a higher percentage fee, allowing them to serve a broader range of consumers, including those with less-than-ideal credit.
Benefits of Offering Financing in Home Improvement Sales
Regardless of the rate structure or promotional options you choose, offering consumer financing options is a smart move for home improvement businesses. Payment flexibility serves homeowners looking to embark on a new home project while helping contractors grow their bottom line. Here are just a few benefits of offering consumer financing for home improvement sales:
- Increased average order value: With payments spread over time, customers are more likely to say yes to the full scope of a project rather than scale back to stick to a budget. And when homeowners can expand their project or choose premium options for just a few dollars more per monthly payment, selling the upgrade is virtually effortless.
- Broader customer reach: Financing attracts homeowners who wouldn’t otherwise accept the project quote or be willing to pay the full amount upfront, widening the pool of clients a business can serve.
- Faster close rates and shorter sales cycles: A monthly payment option mitigates budget hesitations, moving customers from consideration to purchase more quickly. A more efficient sales process allows contractors to book and complete more projects in less time, reducing time and resources wasted during negotiations or stalled sales conversations.
- Competitive differentiation: In categories like roofing and HVAC, financing has shifted from a nice-to-have to a baseline expectation, making it a competitive necessity. Consumers expect monthly payment options for big-ticket purchases, and homeowners will shop around until they find a contractor who offers one.
- Predictable cash flow for the contractor: Payment comes from the lender up front, rather than the business waiting on installment payments from the customer over time. The right financing partner pays your business promptly, ensuring you have the cash flow you need to run your business.
What to Look for in a Consumer Financing Partner
As home improvement contractors explore consumer financing providers, there are a few essentials to consider:
- Approval rates across credit tiers: A partner that only approves prime credit shrinks your client pool. Look for a provider with a generous approval rate and flexible risk management options that allow you to onboard more clients across diverse credit profiles.
- Fast credit decisions and funding: Cumbersome applications and slow approval processes lose deals. Quick approval keeps sales momentum rolling, leaving little room for homeowners to second-guess their big remodel or upgrade. UCFS returns a credit decision within minutes – usually within seconds – allowing you to proceed with the project almost immediately.
- Range of payment structures: Payment flexibility attracts clients for high-value services like home improvement. Extended terms for lower monthly payments and same-as-cash financing options encourage homeowners to commit to bigger projects knowing they can more easily afford them.
- Meaningful customer support: Home project financing will only drive sales if your team can confidently present payment options from the first touchpoint. UCFS provides thorough, one-on-one training via Teams to ensure you’re making the most of your financing program.
- Sales integration: In-home providers need a mobile-first approach to financing that lets homeowners apply and e-sign on-site. And, if the purchase decision isn’t made immediately, a credit application and esign process by email.
- Transparent consumer terms: Hidden dealer fees and confusing terms lead to homeowner complaints that reflect poorly on your business. UCFS provides clear, consistent terms, so there are no surprises for the business or its clients.
- Fast contractor payouts: Funding speed matters for cash flow, especially for home improvement companies. UCFS provides payment in just 1 to 2 days giving your business the cash needed to grow sustainably.
A Marmon company and a division of Berkshire Hathaway, United Consumer Financial Services has the expertise and resources to help you implement a financing program tailored to your needs. With nearly fifty years in this industry, we know that the right financing program can mean the difference between businesses succeeding and failing. Our team is ready to partner with you to provide the right options for your company and the homeowners you serve.
Book More Home Improvement Projects with Financing from UCFS
Contractors have hundreds of options for consumer financing partnerships, but finding the right match is key. The best program for your home improvement business caters to your unique margins, risk tolerance, and customer base. United Consumer Financial Services brings decades of industry-specific consumer financing expertise to work for our home improvement contracting clients across the U.S. Our seasoned team understands your needs and those of your clients and works to ensure your financing program serves your business goals.
UCFS provides the platform, tools, and resources to build conversion-driving financing programs for contracting businesses of all sizes. Reach more homeowners and book more high-value jobs. Contact UCFS today.
