How to Offer Financing to My Customers – Updating

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Reading How to Offer Financing to My Customers – updating 2022

This is how I offer my customers financing

When you think about offering financing to your customers, you might imagine your company extending the loan directly and then your customers repaying you. While this is one of the ways to offer financing to your customers, there are much simpler and less complicated alternatives.

Contractor financing is a way of having customers pay for services or jobs over time rather than upfront. While clients pay over time, contractors are paid in full or enough to complete the project and receive the rest once the job is complete. Contractor financing options for customers are lifesavers when homeowners cannot afford the full price up front.

What are the advantages of customer financing?

Customer financing for contractors can be beneficial for both the contractor and the client. The former can increase sales and order size, and the latter can gain access to larger projects and benefit from faster start dates. Below are some other benefits of offering financing to customers.

Benefits for your company:

  • Look more professional
  • Become the most convenient company to do business with
  • Give customers more options
  • Increase revenue (by selling more projects)
  • Improve customer satisfaction and loyalty
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Advantages for your customers:

  • Reduced stress
  • Convenience
  • Access to larger and higher quality projects
  • Faster start and completion dates
  • Borrowers with good and bad credit can qualify for financing
  • You don’t have to pay for everything at once
  • Affordable monthly payment plan

What customer financing options do I have?

Basically, you have three financing options:

  • Extend credit yourself
  • Dealer Financing
  • Third Party Funding

Extend credit yourself

As mentioned above, you can extend the credit yourself. This means you need to do credit checks to determine creditworthiness, complete all paperwork and collect payments yourself. It is a riskier, time-consuming and responsible option, especially if the customer stops paying.

Dealer Financing

You can also work directly with lenders. In this case, if you want your customers to have multiple options from different lenders, you need to work with multiple lenders. You need to find a lender that will work with you on an affordable and repeated basis.

Third Party Funding

However, there’s a third option that’s especially good if your business is small: debt financing for your customers. The third party connects your customers to lenders who offer financing. Third-party providers typically have a network of multiple lending partners who can provide pre-qualified loan offers. This means your customers get more competitive offers from trusted lenders when they request financing, compare interest rates and monthly payments, and proceed with whichever option they want.

To learn more about all of these options, read this article on home improvement financing: “What you need to know before offering financing to clients”

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How do I offer financing to my customers?

Customer financing allows contractors to move people from just thinking and searching to actually buying services. And the easiest way to offer financing to your customers is to partner with a third-party provider like Enhancify, which has a network of lenders.

If you have a partner, then offer financing by letting your customers know that financing is available. You can communicate this to your customers on your website or directly. With a link to financing options on your website, your customers or prospects can even pre-qualify themselves for financing before speaking to you.

When your customers apply for financing through your partner, they can see multiple options depending on how many lenders they can pre-approve. In most cases, lenders do a credit check to see if their customers qualify, but some partners show options that only use a soft loan deduction (which doesn’t affect credit scores). Still, a hard pull is performed if the customer decides to continue with the application.

If your client is approved for financing and has agreed to all terms, you can intervene. You will either be paid upon completion of the project or receive part of the payment up front and the rest upon completion of the home improvement project.

PRO TIP: If you don’t know how to talk to your clients about home finance, try the following:
“Hey guys, just a heads up: 50% of our customers pay by check, card, or cash. The other 50% prefer financing with an affordable monthly payment. Help me, which category do you fall into?”

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What are the customer financing costs?

The benefit of offering financing to your customers comes with some fees that depend entirely on the third-party provider you choose to work with. The first fee you may incur when you decide to offer financing to your customers is a one-time setup fee. However, not all partners charge this fee. So if you look around you can find companies that offer free registration.

Financing partners may also charge a monthly fee or an annual plan fee. The monthly fee may vary depending on the number of transactions or the tier you choose. Some partners also charge 0% interest financing fees, merchant fees, or transaction fees for each project. But not all partners do. For example, Enhancify offers three tiers of annual plans, and that’s the only fee a contractor has to pay to offer financing to clients.

There are also financing partners that allow contractors to offset the fees they pay. Therefore, Enhancify pays commissions for every closed deal as well as for referrals.

The final result

Offering customer financing is key to growing your business and generating more sales. They appear more professional and improve customer loyalty. But most importantly, your customers get the services they need.

50% of all home improvement jobs over $5,000 are funded. Also, homeowners look for financing options before investing in a home improvement project. So, contractor financing for customers can open doors to more sales and larger orders for the benefit of contractors and homeowners.

Don’t think your customers want or need financing? Read this story about how just offering financing drives sales: “None of my clients are asking for financing. I don’t have to offer them. [with Case Study]”

So the article “How to Offer Financing to My Customers” has end. Thanks you and best regard !!!

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