Sales · How-to

Offering financing to customers: how it works and how to present it honestly

Contractor financing lets a homeowner pay for a big job over time through a lender you partner with; the customer signs the loan with the lender, and the lender pays you, usually minus a dealer fee. Mention it once as a normal payment option, show the full price beside any monthly figure, and never hide the fee in a higher price for financed customers.

By Eric Smith, founder of Outfitter AI and a former general contractor · Prices checked October 4, 2026

This guide is by Outfitter AI, which sells an AI receptionist; nothing here depends on using it.

Why offer financing at all

Most of the big jobs you sell arrive as surprises. A furnace dies in January, a sewer line collapses, a storm takes half a roof. Plenty of good customers can’t write a check that size on short notice. The Federal Reserve’s 2025 household survey found 63% of adults would cover a $400 emergency expense with cash or its equivalent [1]. A replacement system costs many times that.

Financing lets those customers fix the problem now and pay over time. It can also let a customer choose the right equipment instead of the cheapest. ServiceTitan, a field-service software vendor, says its own customer data shows financing raising sales by more than 17% and users seeing 16% higher average tickets [2]. That’s vendor research from a company that sells a financing feature, so treat it as a claim.

The flip side is real too. Badly sold financing has burned a lot of homeowners, and regulators have noticed. Done right, financing is a payment option you mention once, explain clearly, and never use to push a bigger job than the customer needs. It sits in the payment-terms stage of the contractor sales guide, next to deposits and payment terms.

Financing fits some trades far better than others. Roofers, HVAC and plumbing replacement shops, electricians doing panel and service upgrades, and remodelers sell jobs big enough that a monthly payment changes the decision. Recurring services like lawn, pest and cleaning rarely need it; a monthly plan already spreads the cost. If your average ticket is a few hundred dollars, a card on file solves the same problem without a lender in the middle.

How contractor financing works

You don’t lend money. A lender or a lending platform does. Your role is to offer the application and get paid when the job is approved and done. The typical flow:

You sign up with a program. A lender or platform approves your business and gives you an application link, a QR code, or a button inside your estimate software.
The customer applies. Usually on their phone, in a few minutes. Many programs check eligibility first with a soft inquiry that doesn’t affect the credit score; others pull credit hard. Ask which.
The customer sees offers. Amount, APR, term and monthly payment. They pick one, or none.
The customer signs the loan with the lender. The loan agreement is between them and the lender, not you.
You do the work and get paid. The lender pays you, often minus a fee, once the customer confirms the job.

Here’s how two programs describe themselves on their own pages, as examples, not endorsements:

Wisetack (installment loans)

Loans up to $65,000 at 0 to 35.9% APR depending on the amount and credit, with terms of 3 to 120 months [3]. Wisetack says checking eligibility doesn’t affect the customer’s credit score, it uses simple interest rather than deferred interest, and funds go to the business within 3 business days after the customer confirms [3]. The merchant fee it lists is 3.9% on interest-bearing options and up to 9.9% for a 24-month 0% APR plan [3].

Hearth (lender marketplace)

A software platform that says it connects homeowners to 18+ lenders, with “$0 dealer fees” and no per-loan fees for the contractor [4]. Homeowners apply directly for home improvement personal loans [4]. Hearth charges contractors through a software plan; its pricing page asks you to book a demo for prices [4].

Other routes exist: retail credit cards from big consumer lenders, local banks and credit unions, and home equity loans or lines of credit the customer arranges on their own. For big remodels, customers often do better shopping their own bank.

Dealer fees: who really pays

A dealer fee (also called a merchant fee or discount) is what the lender keeps from your payment. Low-APR and 0% promotions cost the lender money, so they usually carry the highest fees. Using Wisetack’s published rates as an example, a 0% plan can cost the business up to 9.9% of the amount financed [3].

The temptation is to quietly raise the price for customers who finance. That’s where contractors get into trouble. The Consumer Financial Protection Bureau’s 2024 report on solar loans found dealer fees often raised loan costs by 30% or more above the cash price, and that lenders often folded them into the loan principal without counting them in the stated APR [5]. The CFPB also found these markups were rarely separated clearly from the cash price customers would otherwise pay [5]. Solar is its own market, but the lesson carries over to roofs, HVAC and remodels.

You have three honest ways to handle the fee:

Absorb it

Treat it as a cost of sale, like card fees. Works when fees are low and your margins can take it.

Price it into every job

Set one price for everyone that accounts for your average financing cost. Cash and financed customers pay the same number.

Offer only plans with low or no fees

Choose interest-bearing plans with smaller fees, or a platform without per-loan fees, and let the customer’s APR carry the cost openly.

What you shouldn’t do is show one price to cash customers and a hidden, higher price to financed customers while advertising “0% financing.” Read your lender agreement too; many programs set rules on how you may price and advertise their plans.

Disclosure rules and red lines

This isn’t legal advice, and lending rules vary by state. The lender handles the loan disclosures, but what you say at the kitchen table matters too. Federal agencies have spelled out what goes wrong:

Know the difference between 0% and deferred interest. The CFPB explains that “0% intro APR” means interest doesn’t build during the promo, while “no interest if paid in full” means interest is building in the background and gets charged all at once if any balance remains [6]. Never call a deferred-interest plan “interest-free.”
Don’t rush signatures. The FTC warns homeowners about contractors who arrange loans through a lender they know, then hurry the homeowner through papers that turn out to be a high-rate home equity loan with points and fees [7]. Give customers time to read everything, and never let them sign a form with blanks.
Encourage comparison. The FTC tells homeowners to compare loan terms elsewhere before taking contractor-arranged financing [7]. Say it first: “You’re welcome to check your bank or credit union too.”
Respect the cooling-off period. For many sales made at the customer’s home, the FTC’s Cooling-Off Rule gives the buyer until midnight of the third business day to cancel, and the seller must provide two copies of a cancellation form [8]. Some states add their own rules on top.
Put the financing promise in the contract. If you said “same price whether you finance or pay cash,” write it down.
Don’t promise approval or rates. The lender decides. Say “you may qualify for” and let the application show the real offer.
Don’t promise savings that pay for the loan. Overstated energy savings were one of the CFPB’s complaints in the solar market [5].

How to present financing honestly

Bring it up once, early in the in-home visit, as a normal payment method, the same way you mention you take cards. Customers who need it hear that it exists without being singled out.

Mention during the visit: Most people pay by card or check, and we also offer financing through a lender if spreading it out helps. Checking your options takes a few minutes on your phone and doesn’t commit you to anything.

When they ask about 0%: The 0% plan is 24 months. If it’s paid off in that time, there’s no interest. After that, the remaining balance carries the rate shown in your offer. Let’s look at the actual terms on your screen together before you decide.

When the monthly number is tempting them to upsize: The bigger system is a great unit, but the one I recommended does the job for your house. I’d rather you pick the option that fits your budget comfortably.

On the written estimate, show each option’s full price first, then a payment example beneath it, with the APR and term that produced it. ServiceTitan recommends showing monthly figures next to each tier of a good-better-best proposal [2]; just keep the total price in the same line of sight. If you use one, label the payment example clearly as an example.

Estimate line, example: Option B: $11,400 total. Example: $11,400 financed for 60 months at 9.99% APR would be about $242 a month, subject to lender approval. Your actual rate and payment depend on the offer you receive.

Check the math in any example you print with a loan calculator, and use only terms your program really offers.

Setting it up in a week

List your typical job sizes. A pest or cleaning company rarely needs financing; HVAC, roofing, plumbing replacements, electrical panels and remodels often do.
Compare two or three programs. Ask each: loan range, APR range, terms, soft or hard credit check, deferred or simple interest, fees to you by plan, how fast you’re paid, and what marketing rules apply.
Read the merchant agreement. Look for pricing rules, chargeback terms, and what happens if a customer disputes the work.
Train everyone who sells. Same words, same disclosures, same rule about never rushing signatures.
Add it to your estimate template and website. A short “payment options” line, not a banner screaming low payments.
Review complaints and cancellations quarterly. If financed customers complain more than cash customers, something in how you sell it needs fixing.

Common questions

How does contractor financing work?

The contractor signs up with a lender or lending platform. The customer applies, often on a phone, sees loan offers, and signs the loan directly with the lender. The lender pays the contractor, usually minus a fee, and the customer repays the lender.

What is a dealer fee on a home improvement loan?

It's the amount the lender keeps from what it pays the contractor, often higher on 0% or low-rate promotions. Wisetack, for example, lists 3.9% on interest-bearing plans and up to 9.9% for a 24-month 0% plan. The CFPB has criticized hiding these fees in the price of financed jobs.

Can I charge more if a customer finances?

Raising the price only for financed customers while advertising low or 0% financing is the practice regulators have criticized. Safer options are absorbing the fee, building it into one price for everyone, or using plans with lower fees. Check your lender agreement and state law.

Does applying for contractor financing hurt the customer's credit?

It depends on the program. Some check eligibility with a soft inquiry that doesn't affect credit scores; others use a hard pull. Ask your lender and tell customers which it is before they apply.

What's the difference between 0% APR and deferred interest?

With a true 0% promotion, no interest builds during the promo period. With deferred interest, interest builds in the background and is charged all at once if the balance isn't paid in full by the deadline.

Do I need a license to offer financing to customers?

Generally the lender is the licensed party and you refer customers to its application, but rules vary by state and by how involved you are. Ask the lender what its program requires of you and check with your state.

Is offering financing worth it for a small contractor?

It's most useful for jobs above a few thousand dollars, like system replacements, roofs and remodels. For small repairs and recurring services, cards and payment plans usually cover it.

Sources and how we compared

Lending rules and warnings come from CFPB and FTC pages, household data from the Federal Reserve, and program details from each lender’s own site; vendor figures are marked as such. All opened October 4, 2026.

Federal Reserve: Report on the Economic Well-Being of U.S. Households, unexpected expenses data — 2025 survey data
ServiceTitan: Why and how to offer customer financing as an HVAC contractor — April 2024; vendor research
Wisetack vs. Synchrony (Wisetack’s own comparison page) — Lender platform’s own claims
Hearth pricing — Platform’s own claims
CFPB: Report finds lenders cramming markup fees and confusing terms into solar energy loans — August 7, 2024
CFPB: How to understand special promotional financing offers on credit cards — June 2017
FTC: How to avoid a home improvement scam — Federal Trade Commission consumer advice
FTC: The Cooling-Off Rule — Federal Trade Commission consumer advice

Last updated October 4, 2026. Prices change; if something here is out of date, call or text (507) 628-0400 and we’ll fix it.