In the home improvement industry, customer financing often attracts the attention of contractors who recognize the potential benefits it could bring to their business. Despite this awareness, many contractors hesitate to implement customer financing due to concerns over associated fees. They worry that these fees will either erode their profit margins or necessitate a price increase, which could drive them out of the competitive market. However, contractors can employ several strategies to offer financing without incurring additional costs or raising project prices for their customers.
Here are a few strategies contractors can use to offer financing while keeping their pricing competitive:
1. Partner with Financial Institutions Offering Zero-Fee Programs
Contrary to popular belief, not all financing options come with fees that contractors must shoulder. Many financial institutions offer programs specifically designed to eliminate dealer fees for contractors. For instance, certain credit unions, such as Salal, provide indirect lending programs that include zero dealer fee options, allowing contractors to offer their customers financing without raising prices.
These programs generally enable contractors to present financing options directly to customers at the point of sale, with the financial institution managing the loan. This arrangement allows contractors to offer their customers an additional service while avoiding extra costs.
2. Offer Financing Through Indirect Lenders
Indirect lending allows contractors to finance customers without managing loans themselves. The contractor partners with a financial institution that handles the financing process from start to finish. In this scenario, the customer makes payments directly to the lender. This approach simplifies the process for contractors, who don’t have to worry about managing or processing loans. Customers benefit from having access to affordable financing options that fit their budgets.
3. Leverage Credit Union Partnerships
Credit unions can be valuable partners for contractors looking to offer customer financing. They often provide lower interest rates and more favorable terms compared to traditional banks, which can help contractors attract more business. Additionally, some credit unions offer special programs that eliminate dealer fees, allowing contractors to offer financing without incurring additional costs.
These partnerships can be a win-win for contractors and customers: contractors can close more deals by offering affordable financing, and customers can access the financing they need without paying extra fees or inflated prices.
Fortunately, the belief that offering customer financing automatically means raising prices is a misconception. Contractors have multiple options to provide financing without passing the costs on to customers. By partnering with financial institutions that offer zero-fee or low-cost financing programs, utilizing indirect lending solutions, and leveraging credit unions, contractors may be able to maintain their profit margins while making their services more accessible.
Offering financing without increasing project costs is not only possible for home improvement contractors looking to stay competitive—it can also be a key to closing more deals and growing the business.
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
