Offering customer financing

The homeowner liked your estimate for the $18,500 system replacement. They liked it enough to ask two questions about the warranty and one about scheduling. Then they said they would talk it over with their spouse, and you have not heard back in nine days.

Nothing was wrong with the price. They do not have $18,500 sitting in checking, and the only options you gave them were a check and a card. A third-party financing option turns that into a monthly number, and — this is the part that matters to you — the lender pays you in full while the homeowner pays the lender back over five or ten years.

What lender financing changes

There are three parties and the flow is short.

The customer applies, usually on their phone from a link or a QR code you hand them. The lender runs a credit check and returns a decision in a minute or two: approved for an amount and a term, approved for less than you asked, or declined.

If approved, the customer signs a loan agreement with the lender. Not with you. You are the merchant on the transaction — often called the dealer — and your role is to confirm the work.

The lender funds you. Most programs pay after the customer signs a completion certificate, typically within a few business days. Some will fund in two draws, part at material delivery and the balance at completion, which is worth asking about before you enroll if you buy equipment up front.

The customer then pays the lender monthly for the life of the loan. Read the dealer agreement for any recourse, funding holdback, chargeback, or dispute provisions before treating a funded job as fully final.

The dealer fee comes out of your funding

Financing is not free to you, and the cost is not billed — it is withheld. The lender may fund the job minus a percentage, called a dealer fee, dealer discount or merchant fee.

That percentage tracks how good the deal is for the customer. A plain loan at the lender's standard rate costs you very little, because the customer's interest pays for the program. A twelve-month zero-interest promotion costs you a lot, because somebody funds that interest and it is you. Ranges vary by lender, program and your volume, so treat these as the shape of the pricing rather than a rate sheet:

That fee is a cost of sale and belongs in your pricing, the same way card processing does — but read your dealer agreement before you decide how. Most agreements bar you from charging a financed customer more than a cash customer for identical work. Where that clause exists, the fee either sits in your price for everyone or comes out of the margin on that job.

What the customer sees

The reason financing closes jobs is that it changes the question from "can I write this check" to "can I fit this payment." Same $18,500, three structures, straight amortization arithmetic:

Those APRs are illustrative — actual rates depend on the lender, the program and the customer's credit tier. The pattern holds everywhere, though: long terms make almost any job affordable monthly and cost the customer a lot in total. That is a real tradeoff, and you should not pretend otherwise if they ask.

Approval is never guaranteed, and a decline is awkward once you have built the sale around it. Some contractors enroll with two lenders — a prime program plus a second-look program that approves more applicants on worse terms — so a decline becomes a smaller offer rather than a dead end.

Lender-financed versus carrying it yourself

Both let the customer pay over time. They are completely different businesses for you.

A plan you carry makes sense for a $3,000 job with a repeat customer. For a $25,000 job with someone you met last Tuesday, a lender does something you cannot do at any price: it takes the default risk off your books.

Getting set up as a dealer

Enrollment is a business credit application, not a form. Expect the lender to want your EIN and W-9, entity documents, contractor license number where your state issues one, proof of general liability, bank details, and often a personal guarantee from the owner. Thin credit files get declined or approved with holdbacks.

Read the recourse language before you sign. A lender may reserve rights where a customer disputes the work, and consumer-credit rules can preserve a customer's claims and defenses in a financed sale. Financing does not insulate you from a job done badly. It may reduce your exposure to a customer who cannot pay for one done well.

Where you can get in trouble

You are not a lender, and staying on the right side of that line has a few rules attached.

Advertising. Consumer-credit advertising can trigger federal and state disclosure rules when you state a payment, APR, or term. Use lender-approved language and have it reviewed rather than inventing a monthly-payment claim.

Fair lending. Offer the option to everyone the same way. Deciding in advance who "probably would not qualify" based on the neighborhood or how someone looks is precisely what the Equal Credit Opportunity Act prohibits.

State licensing. Some states license or register businesses that arrange consumer credit, and some have home-improvement rules about financed contracts, cancellation periods and door-to-door sales. Confirm your own obligation with your state licensing board or an attorney before you start selling financed work.

Putting the financed number where the customer sees it

Financing only helps if it is visible while the customer is still deciding. That means the monthly figure sits next to the total on the document they are looking at, not in a follow-up email two days later. DoneQuote builds that document from your own services and prices, so the total you calculated — dealer fee included, if that is how you priced it — is the total the customer sees and approves, and your financing option can be shown right beside it instead of raised as an afterthought when the job is already stalling.

Worth remembering

Third-party financing is a sales tool with a known price. You pay a percentage of the job and collect the whole job in cash days after completion, carrying none of the default risk. On big-ticket residential work — HVAC changeouts, roofs, windows, whole-house repipes — that percentage often costs less than the jobs you lose to sticker shock. Price the fee in deliberately, know what your program costs at each promo level, and never quote a payment figure you have not been given approved language for.