Make it easier for homeowners to say “Yes” to your roofing offer. Financing can relieve major financial headaches for your leads and customers. Here’s how to implement it!
If you’re a roofer, you know better than anyone that roofs are expensive. In fact, that’s probably why you’re a roof. Everybody needs a roof, so demand is always high. And unlike other high-demand industries, most jobs are worth thousands of dollars. Clearing $1 million in sales is fairly common for roofers who play their cards right.
But that high ticket price causes its own headaches. Few homeowners have enough cash sitting around to cover a roof replacement. And insurance claims are getting harder and harder to score for homeowners.
The best solution for roofers? Financing options. On every quote, include a monthly payment option to help lower the financial burden.
Here’s your complete guide on why every roofer should offer financing options and how to make it happen!
Options for funding a new roof.
Homeowners only have a few choices to pay for their new roof. It’s either insurance, cash, or debt of some kind. For this article, insurance is off the table. That means homeowners have to either have lots of cash lying around or have to resort to debt.
The Cash Conundrum
The cost of a new roof can range from $5,000 to $20,000. Let’s say the average homeowner needs at least $10,000 for a standard roof replacement.
Most folks don’t have that kind of money lying around. Studies show that nearly 40% of Americans struggle to cover a $400 surprise expense. Expecting them to have $10,000 for a roof? That’s a pipe dream. Instead, homeowners push off repairs. That means more damage and higher costs down the line.
The Debt Dilemma
When cash isn’t an option, is the only alternative. Credit cards, personal loans, or home equity loans all come into play. Each comes with its baggage:
- Credit Cards. Handy, but they pack a punch with high interest rates. The only exception is that some homeowners will apply for a new credit card at 0% APR and use that for the roof.
- Personal Loans. These loans might have lower rates. But good luck getting a deal without a solid credit score.
- Home Equity Loans. These use the home’s value as collateral. They might offer lower rates, but miss a payment and your house is on the line.
That’s a huge problem, especially if you’re a roofer who sells on value and not price. Competitors will swoop and cut your throat with impossible lowball deals. Homeowners get crap workmanship. You lose out on a job. And even the lowballers make such little profit that they struggle to stay in business. It’s a lose-lose.
That’s where financing enters the picture…
The Psychology and Practical Benefits of Financing
Homeowners hit a mental roadblock when they see the cost of a new roof. The big upfront price can feel overwhelming, causing stress and delays. Offering financing eases this stress, turning a scary expense into easy monthly payments.
Financing opens doors. Most folks can’t pay a huge sum all at once, but they can handle monthly bills. By offering this option, you reach a wider crowd. People who would have delayed or skipped roof work due to cost can now move forward with confidence. This means more homeowners get the roofs they need without breaking the bank.
When you offer financing, you clear a big obstacle. Customers are more likely to say yes when they see a payment plan that fits their budget. This means more deals closed and a busier schedule for you. Knowing they have a payment option, homeowners can commit to their roofing project without worry.
Financing sets you apart from the competition. While others cut prices and quality, you keep your high standards. Financing lets you give top service without making customers choose between quality and cost. That makes you a trusted and reliable choice in the market.
How NOT to Do Financing
Financing can change the game for your business, but there’s a right and wrong way to handle it. The biggest mistake? Advertising roofs for $49 a month. It might grab attention, but it sets everyone up for disappointment and bad reviews.
Why is this a trap? Because you don’t know who will qualify for financing, and you can’t guarantee everyone will get that low rate. When homeowners see a $49 offer, they expect a sweet deal. But once the fine print kicks in, they realize it’s a far cry from reality. Monthly payments can balloon due to credit scores, loan terms, and hidden fees.
Picture the homeowner’s frustration. They walk in expecting a bargain and walk out feeling duped. This bait-and-switch tactic destroys trust. Customers feel misled, leading to a flood of negative reviews and bad word-of-mouth.
Unrealistic offers also come with tangled terms. Low monthly payments usually hide a maze of conditions. High interest rates, long payment periods, and extra fees can turn a great deal into a nightmare. Customers don’t want to wade through complex financing jargon. They want simple, honest deals.
Moreover, advertising rock-bottom rates can hurt your reputation. Word spreads fast when customers feel cheated. Potential clients will avoid you, fearing the same fate. In the long run, misleading offers harm your brand far more than they help.
The key? Keep it real. Be upfront about costs and terms. Show realistic monthly payments based on various scenarios. Explain clearly what’s included and what’s not. Transparency builds trust and sets the right expectations.
When discussing financing, keep the terms simple. Ensure homeowners understand the interest rates, payment periods, and any extra fees. Clear communication prevents misunderstandings and ensures customers know what they’re getting into.
READ MORE: 5 Roofing Quotes Mistakes Killing Your Profit
How to Start Offering Financing
Ready to offer financing? Here are three ways to get started: lend the money yourself, work with a financial institution, or go with a third-party platform. Each option has its perks and pitfalls, so let’s break them down.
Lend the Money Yourself
Providing in-house financing means you lend the money directly to your customers. Here’s why this method can work:
- Full Control. You set the terms, interest rates, and repayment schedules. This flexibility allows you to tailor financing to your customers’ needs.
- Quick Approvals. Since you’re handling the loan process, you can approve financing faster, helping to close deals more quickly.
- Customer Trust. Customers may feel more comfortable dealing directly with you, knowing they won’t need to navigate another company.
However, lending the money yourself comes with downsides:
- Financial Risk. If customers default, you bear the financial loss. This can impact your cash flow and profitability.
- Complex Management. Managing loans requires robust systems and processes. It can be time-consuming and may require additional staff.
- Capital Requirement. You need substantial capital to lend, which can strain your resources.
Work with a Financial Institution
Partnering with a bank or credit union is a popular choice for many roofers. Here’s why this method is effective:
- Easy Setup: The financial institution handles the loan process. They assess the customer’s credit, approve the loan, and manage the repayment.
- Credibility: Working with a reputable bank adds trust. Customers often prefer dealing with known financial institutions.
- Reduced Risk. Since the bank takes on the risk of the loan, you don’t need to worry about defaults impacting your business.
But, there are cons to consider:
- Limited Control. You have less control over the terms and conditions of the loans, which might not always align with your customers’ needs.
- Approval Rates. Banks may have stricter lending criteria, leading to lower approval rates and potential lost sales.
- Dependency: Relying on a third party can create dependency. Any changes in their policies or processes can affect your business.
Go with a Third-Party Platform
Third-party platforms like GreenSky, Wisetack, and improvifi provide financing for home improvement projects. Here’s why this method can be advantageous:
- Specialization. These platforms focus on home improvement loans, making the process smooth and customer-friendly.
- Wide Reach. Third-party platforms often have a broad network of lenders, increasing the chances of customer approval.
- Convenience. They handle all aspects of the loan, from application to repayment, freeing you up to focus on your core business.
However, third-party platforms have their drawbacks:
- Fees: These services often come with fees that can eat into your margins.
- Brand Perception. Relying on third-party financing can sometimes make customers wary if they prefer dealing directly with you or a known bank.
- Complex Integration. Integrating with a third-party service can get complicated and require training.
Choosing the Right Financing Option for Your Business
Now that you know the different ways to offer financing, how do you choose the right one for your business? Here are a few tips to help you decide:
- Assess Your Resources. If you have the capacity, in-house financing could offer the most control. But if you’re just starting or prefer to minimize financial risk, working with a financial institution or third-party platform might be better.
- Know Your Customers. Understand your customer base. If they trust well-known banks, partnering with a financial institution makes sense. If they prefer convenience and speed, a third-party platform could be the way to go.
- Evaluate Your Goals. Are you looking to quickly boost sales with easy-to-implement options? Third-party platforms offer quick setup and broad approval chances. If you aim to build long-term customer relationships with customized plans, in-house financing might be worth the effort.
- Consider the Competition. Look at what other roofers in your area are offering. If they’re all using bank financing, offering in-house or third-party financing could set you apart.
Conclusion
So, why wait? Start exploring financing options today. Offer your customers the financial breathing room they need. With the right approach, you’ll not only provide top-notch roofing services but also build lasting relationships. Here’s to more sales, happier customers, and a thriving roofing business!
