9 Mistakes to Avoid When Selling with Home Improvement Financing

5 minute read | 7/20/23

home improvement customer financing

Home improvement financing is a powerful tool to help grow your business. Beyond expanding your company’s market share, providing your customers with affordable financing for your home improvement services has several benefits (you can read about them in another article we wrote here). However, considering the inherent complexity of finances, many mistakes can be made when selling financing to customers. Keep reading to learn the nine mistakes to avoid.

Mistake 1: Failing to Have the Money Conversation

We get it; talking about money has been stigmatized. It can be a tricky question to ask, but it’s essential. Your sales team can nail the pitch and hook the customer, but that means nothing if the customer cannot pay for your services. Start the sales pitch by asking: “How do you plan on paying for the project?” to mitigate this common mistake and save valuable time.

Mistake 2: Not Knowing the Client’s Desired and Max Budget

According to a home advisor survey, many homeowners underestimate the actual costs of home improvement. Your client will have a “desired” budget that may or may not be within the range of their project. Everyone wants the best bang for their buck, but most realize they may need to shell out more than they desire for the project. This is your client’s max budget. To avoid this pitfall, once you know how your client plans to pay for the project, ask them for a budget range, and if they would like to finance, it’s helpful to get them prequalified to tailor your quote.

Mistake 3: Not Training Your Sales Team

With different types of financing, loan terms, conditions, and rates, providing home improvement financing can quickly become confusing for your team. If it’s confusing for your team, they won’t be able to pitch financing to your customers effectively. When you partner with Salal Dealer Direct to provide home improvement financing, our dedicated staff takes the time to train you and your team on every step of the financing and sales process.

Mistake 4: Not Accounting for Project Contingency Costs

If you are a seasoned home improvement professional, you likely know how important it is to have project contingency costs built into the budget. A common mistake when selling financing is that the customer maxes out their approved budget on the project without considering the potential for overages. We recommend discussing this with your client beforehand to determine their strategy for potential project cost overages.

Mistake 5: Underestimating the Project Timeline

The client loves your bid and wants to move forward with home improvement project financing. So, you run their credit and start the financing process. Fast forward 120 days; due to project delays, it has yet to be started. Now you have to re-pull your client’s credit score, which comes back with negative marks. While it may be hard to establish an accurate timeline due to all the unknowns, it’s important to remember how long credit approvals are good for and relay that information to your client so that they keep their creditworthiness in a good position.

Mistake 6: Improperly Managing Cash Flow

Different types of home improvement financing provide funding at different stages in the process. Some provide the customer with funds immediately, while others offer staged financing based on project milestone completion or only fund when the project is fully completed. You risk having cash flow issues if your team doesn’t account for these funding timelines.

Mistake 7: Not Accounting for Financing Fees

Some financing partners, like Salal Dealer Direct, offer standard programs that allow you to provide customers with home improvement financing at no additional cost. However, depending on your market and business goals, you may want to offer more competitive rates to your customers. In this case, you will likely incur dealer fees. Your project margins will suffer if you don’t account for these fees when selling financing.

Mistake 8: Failing to Explain the Terms and Conditions

Transparency is crucial when discussing home improvement financing options. Failure to clearly explain the terms and conditions of a financing agreement can lead to misunderstandings, buyer’s remorse, and potential disputes. Ensure that customers understand the interest rates, repayment schedules, associated fees, and any possible consequences of late payments or default.

Mistake 9: Failing to Disclose Fees

Like terms and conditions, hidden fees or charges can be a major turn-off for customers. Make sure to disclose all fees, including origination fees, processing fees, and any other charges associated with the financing. Being transparent about these costs from the beginning will build trust with customers.

Don’t let these potential pitfalls dissuade you from offering home improvement financing. With a trusted financing partner like Salal Credit Union, you can rest assured that your business and customers will receive unparalleled customer support and service.

Are you ready to grow your business by offering home improvement customer financing?

Partner Forward with Salal Dealer Direct

We team up with contractors nationwide to provide their customers with affordable financing for various solar and home improvement projects.

We can offer some of the most competitive rates and dealer fees because we’re part of a member-owned credit union. That means our profits return to our members—and business partners—through lower rates and fewer fees.

Our Dealer Direct Financing programs feature:

  • An online loan application with fast credit decisions and a high approval rate.
  • Terms and loan amounts are available to fit various budgets and project sizes.
  • Partners pay ZERO dealer fees on our standard program.

How to Start Offering Salal Dealer Financing to Customers

We’re serious about helping your business grow with fast funding times and personalized support from a dedicated and experienced team of lending specialists. To get started, our dealer application process requires these documents:

  • Completed dealer questionnaire
  • Current income statement and balance sheet
  • Copy of business license and/or contractor’s license


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