Many homeowners don’t understand the value of financing and the impact it can have to free up their cash reserves for use in their everyday life. Also, millennials are taking over home buying, and have very different financial characteristics than stereotypical homeowners. They came of economic age during the worst financial crisis in 75 years and have been impacted significantly by the rapid rise in the cost of college education. This can be challenging for contractors to identify with.
Using financing has distinct advantages for both you and the customer:
Greater Flexibility. Financing allows your customers the flexibility to replace old equipment with new solutions or upgrade equipment at any time without harming their budget. Nearly half of all home improvement projects over $5000 are financed, and it’s been shown that consumers spend 30% more on credit transactions than they do on cash or check transactions. The ability to finance can make that larger project a reality.
Reduce Total Cost of Ownership. When homeowners finance they can better forecast cost since they know the fixed dollar amount and number of years for which they owe. This means no big surprises to break the bank and ruin summer vacations.
Improve Cash Flow. With financing homeowners only need to make a minimum initial investment to get the equipment they need to ensure their daily comfort. This frees up their cash flow for all of their routine day-to-day needs and not so routine major costs. Credit and financing can have significant positive impacts on cash flow for business owners as well.
A tool for assessing economic data in your local market is MelissaData, which allows you to look up income tax statistics by zip code. You can also look up the National Ranking of Adjusted Gross Income, the ratio of Earned Income Tax Credit to Total Returns, which is an indicator of a number of low-earning households, and the ratio of Millennials to Total Returns. This data can be instructive in your sales and marketing efforts.
Using financing can be a win for both the customer and the contractor. Good luck!