Offering consumer financing is a valuable business tool because it can help contractors stand out in a competitive field and win more business. By using financing to show potential customers how affordable a home improvement project can be, contractors can close more deals and increase their average ticket amount.
As mortgage rates increase and major housing markets get hotter and hotter, many homeowners are opting to renovate their houses rather than trading up for a bigger or better home. According to a recent study on home improvement trends, 84 percent of homeowners have no plans to leave their current home. Meanwhile, half of all homeowners are considering a renovation in the next 12 months.
Contractors can tap into the high demand for home improvements by offering flexible financing solutions to customers as part of every sales conversation.
What is third-party financing?
Third-party financing is a safe and convenient option for contractors looking to offer loans to their customers. With third-party financing, an outside loan provider (like Financeit) oversees all aspects of the consumer loan, from approving the loan application through to collecting the final loan payment.
For contractors looking to offer customer financing for high-cost home improvement projects, third-party financing can be a smart solution that allows you to provide flexible loans without taking on the risk of funding and managing the loan in-house. Instead, you get the full purchase price in your bank account when the job is done and your customer signs off on the work.
Home improvement financing benefits for contractors
There are many ways offering home improvement financing can benefit your business. Here are just a few of them:
1. Close more deals
Home improvement businesses can close more deals by offering financing. The cost of home renos can quickly add up for customers. You can show potential customers that financing can help them get the updates they want without breaking their budget, by breaking down expensive purchases into low monthly payments.
2. Increase your average purchase amount
Offering consumer loans for home improvement projects can increase your average sale amount and boost your revenue. Using a tool like Financeit’s Payment Calculator allows you to show customers on the spot how a small increase in their monthly payments can give them all the upgrades they want. A recent survey found that a business’s average transaction size increases by 15% when they offer financing to customers.
3. Earn repeat business
Offering flexible financing options can help keep your customers satisfied and convince them to choose your company over its competitors for future home improvement projects. Recent studies have found that 93% of customers who use consumer financing to make a purchase would choose to use it again for future purchases. Once a customer is familiar with your financing options, they may be more likely to give you their business in the future as a result.
4. No financial risk to your business
When you use a third-party financing provider like Financeit, you eliminate the risks commonly associated with consumer lending. The lender is responsible for approving customers for loans, collecting monthly payments and securing late and missed payments. With third-party loans, you can offer customers low monthly payments without having to assume any financial risks.
5. Get paid faster
Third-party financing allows contractors to offer loans and get paid faster for their work. With Financeit, you get paid the full purchase amount once a job is complete and the customer signs off on the work. That way, your business isn’t hit with cash flow issues that can arise with in-house lending programs.
Home improvement financing benefits for consumers
There’s good reason that nearly every customer who uses financing would choose to do so again. Here are some of the top ways financing can benefit your customers when they’re planning a home improvement project:
1. Greater purchasing power
One of the most common reasons customers opt for personal loans when booking home improvement projects is that it gives them greater purchasing power. Consumer financing allows your customer to stay on budget while getting all the improvements they want. A small increase in your customer’s monthly loan payments can allow them to afford upgrades or additional services.
2. Fast loan approvals
When you offer third-party financing, customers get loan approvals on the spot, so they don’t have to wait and wonder whether they qualify for your financing program. Faster approvals benefit your customer by helping them stick to their project timelines, and they help contractors close sales on the spot.
3. Competitive lending rates
Many customers opt for consumer loans to finance home improvement projects because they can often get lower interest rates through third-party financing providers than with other lenders. While interest rates vary depending on the size of the loan, the customer’s credit rating and the type of project funded, interest rates for third-party financing are typically lower than those offered by most credit card companies.
What types of home improvement businesses can offer financing?
Consumer financing is available to most home improvement businesses. Contractors in various industries offer financing to customers to close more sales and increase their revenue, including:
Boost your sales by offering your customers financing for their home improvement purchases.
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