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Should You Offer Financing to your Customers?

Image of Olivia Orme
Olivia Orme
Financial advisor sitting down and going over plans with couple

It’s no secret that the home service industry can be expensive for most homeowners. But here’s the thing - it’s not necessarily because of your prices. 

You could be the most affordable roofing, plumbing, or HVAC company in the area, and still experience customers who feel concerned about budgeting. If you already offer a reasonable price point, you might be wondering what else you can do to appeal to your buyers?

Don’t panic - instead, consider home improvement financing. Home improvement financing is a great way to make sure your customer base can still afford the necessary projects they need to restore their home, without breaking the bank.

If you’ve considered offering financing to your customers, but haven’t made the leap, take a look at some of the factors to take into consideration.

How does Customer Financing work as a business owner?

As a consumer, you’ve probably been on the other side of customer financing at least a few times in your life. But what about when it comes time to offer financing to your customers?

On the business end of things, customer financing isn’t all that different. You can go one of two ways: choose to outsource financing to a third party, or manage it all internally.

If you offer your own customer financing, there’s a lot more responsibility involved. You’ll have to run credit checks on all your clients, manage their payments, and payment processing methods. This also means you’ll be receiving living off the monthly payments from your customers, instead of getting all the money at once.

By using a third party such as a reliable bank or financing institution, they will deal with all the money exchanges directly. Your customers will have to apply for financing, and then be able to pay back the bank over an extended period of time.

Depending on what you’re comfortable with, you can choose accordingly. Most businesses like to use a third party, just to keep things simple for themselves.

How Can Your Customers Apply for Financing?

Now that you understand financing, from the business point of view, you still might have one reservation: how difficult is it going to be for your customers to apply, and qualify? Will they deal with higher interest rates? Will they be worried about their credit score? Are there going to be enough financing options available?

Applying for financing is simple enough. Once your customer finds the home improvement project they need to be completed, all they have to do is:

  • Follow the appropriate service portal to apply
  • Fill out the required information required by the bank. They might require a credit check, but it isn’t always necessary to have excellent credit.
  • The applicant will be able to see if they’ve been approved for financing, and will be given a line of credit to work with from the bank.
  • From there, you’ll receive the appropriate balance from the bank, while your customer is able to settle the home improvement loan over a period of time.
  • Typically, the repayment period lasts over the course of a few months and will include some sort of small interest rate with their financing.

While it might appear daunting, everything they need is within reach and can be very accessible to every homeowner.

Overall Benefits of Home Improvement Financing

When it comes to financing, the benefits speak for themselves. Most customers have a hard time dealing with the idea of paying a large lump sum of cash they can’t afford all at once. This could max out their credit cards, and create unnecessary debt. Your customers will be grateful that you’ve given them the option to apply for financing, and are going to be more inclined to promote your business.

As a business owner, you’ll be able to reach access to a wider customer base, because you are offering a service your competitors might not have. Providing a financing service could become a great asset and customer service practice for your business.

The Bottom Line

If you are someone in the home service industry, offering financing is going to be an added benefit to your business, especially if you are in a more exclusive or luxurious field. Remodeling and home design projects are popular areas in the home service industry, that could definitely benefit from financing services. Ultimately, you have to do what is best, but offering financing could be the boost your business needs to make the most out of its digital marketing campaign.

There’s a lot to be considered when it comes to your business, like implementing the right digital marketing strategies that will set you down the road for success. If you want to reach a new audience of homebuyers, learn more about the Importance of (Good) Branding for Your Small Business, and  How to Win Over Millennial Homeowners

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