We are considering offering financing to our customers via a third party online company.
Good? Bad? What can we expect?
Best financing company?
Thanks

We are looking into the same thing. I hear good things about it.

We use Synchony bank. We pay 7-8% to offer their 0% programs. We don’t do a lot, 1 or 2 a month.
I’ve offered it for years and it surprises me who finances with it. I’ve had people tell me “my customers don’t need financing” I read somewhere a few years back that 75% of home improvement projects are financed. It can be CC, HELOC, 401k loans etc. so people are financing. We have found that we are/ were the only company financing in our market and when you are selling to someone that is a financing customer it eliminates all your competition.

Derrek,
I like the idea, and I could see it leading to more sales. 7-8% is a lot to absorb. How are you passing that on to the customer? It seems like a line item of $3,200 for financing charges on a 40k job might scare some folks off?

Or maybe you offer a discount to those that pay with other methods? Just curious.

Me too, what Gary asked

We started taking credit cards and on our first estimate is says that we take them but there will be a fee added to cover our cost. A lot of people don't mind. If they can get 0% credit card or financing for a year or more its still cheaper than 401k loan or something like that. I would like to see how people would take the 7-8% fee though.

Yes 8% is a big amount.
In the past we charged for credit cards, offered discounts or financing but not both etc. a couple years ago I said enough is enough it’s to complicated to try to keep track of all of it and how to deal with it when they said they were going to pay by check but now want to use card. So I raised my prices by about 10% and now I don’t care how they pay. I have chosen the just make it easy route.
This goes back to a something a business coach told me years ago, first make it easy to buy. Second, there are fat deals, normal deals and skinny deals. We will take all of them, naturally we like the fat ones, but 40% of our business is repeat and referrals, so even though we might not have made a killing on this job, we will make it up on the next one, the one after thator the one they refer. And once they are financed it’s easier to finance the next project they want to do.
I try not to finance my cash customers, we look at it as a job we wouldn’t have sold otherwise and so we are gaining the business.
Like I said we don’t do a whole lot, I think last year we financed about 200k

It’s just a part of doing business

Do you finance in house or use a bank?

I recently did my HVAC and a bunch of plumbing. I applied for the 0% thinking the price was the same, the contractor gave me 8% off for cash so I paid for it out of pocket, I just wanted to hang onto my cash if I could pay 0% but its not a real 0% financing.

Someone has to pay, no free lunches!

Larry,
Lots of time on consumer goods you can get a credit purchase with 0% interest if you pay off in certain months, in that situation they make their money on the back end when people only make the min payment and then it reverts to the higher interest rate.

I got a 0% card for carpet after we agreed to a price. In that situation the credit card would make their money if I didn't pay off in 18 months.

For the HVAC they advertised 0% interest but they from load the price to pay the fees and interest.

A

The finance company makes their money on both ends! The difference is the carpet company has absorbed that cost throughout all of there jobs and made it a part of how they do business. The HVAC example given is the guy who says “I’m not paying 8%” and adds the cost onto just that job.

We have considered this in the past. Worth looking into.