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3 Financing Myths Busted

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3 Financing Myths Busted

Remodelers often shy away from offering financing right off the bat, but doing so can generate new leads.


By Nikhil Pai November 27, 2020
Financing options in remodeling
Financing options in remodeling
This article first appeared in the Nov/Dec 2020 issue of Pro Remodeler.

2021 is almost upon us. Any business trying to grow, or even stay with the curve at this point, should be offering payment options that don’t break the company’s bank.

Since a majority of Americans have less than $1,000 in their savings account for unexpected expenses, it’s important to offer ways to pay

While financing has been in the home improvement industry since the early 90s, many home improvement contractors resist adopting financing as part of their businesses despite major progress in products, tech, and best practices.

Here are three of the most common misconceptions about financing in the home improvment industry:

Nobody asks about it, so they don’t want it.

Homeowners don’t always realize that they can finance their project through the contractor, but when offered, it can make a huge difference for clients. Since a majority of Americans have less than $1,000 in their savings account for unexpected expenses, it’s important to offer ways to pay. It pays off for the businesses, too. Our customer win rates increase by up to 18% when offering payment options alongside estimates.

Financing comes with high, confusing fees.

Traditionally, home improvement financing has come with “dealer fees,” or per-loan fees coming out of pocket for every financed loan. These range anywhere from 3% to 20%+, with businesses spending hundreds of thousands in dealer fees annually. 

Deciding whether to raise prices or take the margin hit has caused a large aversion to financing. Fortunately, dealer fees are becoming a thing of the past. Instead, companies provide financing that depends on the homeowner’s credit. Now, you can offer financing without fearing how it will impact your margins. 

Financing should only be used when faced with a financial objection.

Many businesses don’t mention financing until the homeowner says they can’t afford the job. At that point, the deal is most likely already lost, regardless of whether or not payment options are on the table.

 Instead, financing is most successful when it comes up early in the conversation—or even earlier than the first conversation. Promoting it on your website or search advertisements is a way to generate more leads and appeal to a wider range of clients who are actively looking for those options.   

Nikhil Pai is the co-founder of Hearth, a company providing fee-free financing options to homeowners and works with thousands of contractors and service providers. Learn more at gethearth.com. 


written by

Nikhil Pai

Co-Founder of Hearth

Nikhil Pai is the co-founder of Hearth, a company providing fee-free financing options to homeowners and works with thousands of contractors and service providers. Learn more at gethearth.com/pr.


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