What's Up With The Financing This Year?!

Grumpy

Ok I've been selling home improvements for something lilke 5 or 6 years now. Maybe in all that time I had 4-5 people ask if I offered financing. I usually target a higher end customer base.

This year I must have had at least a dozen people ask if I offered financing. I gave my usual answer "We accept visa and master card. If that doesn't help I can give you an application for a line of credit at our bank." In almost each and every case the answer was "Well what about deferred payments, like no payment until 2007?"

Sure maybe if you put your house us as collaterol and I double the price. Or maybe if it's December. WTF is going on this year? I just had a customer try to beat me up on price, and I pretty much stone walled him, though I did give a tolken $100 on a $2,500 job (factored into every job to shut up the askers). Anyways then he asks about deferred payment? His friggin his is worth 1 mil plus.

What's wrong with America!? If you can't afford it, don't buy it! Anyways he signed up and I have some skylights to replace, I'm just confused by this new trend.

joasis

I get a few of those a month, usually in conjunction with our metal roofing. And in every case, they went with shingles..since they could not afford the jump to steel.

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theworx

I think it has a lot to do with the way the big box stores (Home Depot, etc...) have been bombarding the public with ads over the last two years. Ie: "Sign up today for your Home Depot card, have this kitchen installed by our professional installers and don't pay til 2008." Stuff like that get's stuck in their head and they obviously don't seem to understand that small to medium sized contractors can't afford to float the costs of doing those jobs. I also totally agree with your comment "if you can't afford it - don't buy it." That's the reason so many people in North America are in so much trouble these days (it's way to easy to use credit, defer payments, etc...).

ron schenker

My thoughts exactly

Teetorbilt

Interest rates are going up, dividends are going down. Also known as a 'Bear' market. After so many years of a 'Bull' market some are trying to squeeze out the last that they can. Younger players have never been exposed to it.

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You can't solve you're problems with the same level of thinking that created the problems.

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DecksEtc

My grandfather had a similar saying, and I quote: " if you don't have the money for something, you don't need it".

He never had a credit card or line of credit with ANYONE his entire life.

Teetorbilt

I no longer have any credit cards. The fine print kept getting finer and finer. Citi was the kicker when they said that ANY credit drop would put your entire account near the 30% interest rate.

I'm over it!

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You can't solve you're problems with the same level of thinking that created the problems.

Albert Einstein

MarkNoV

Grumpy

Why not factor your receivables?

Mark

ApgarNJ

I keep a few Credit cards, I don't abuse them like some people do, but I do think they do help your credit rating, so when buying a house or doing a larger loan for something you get a great rate. it must be working because my rating is pretty high.

Mike Finley

Sounds like an opportunity in the making from what you are describing Grumpy.

About credit cards, I couldn't imagine life without them. I put everything on them and pay them off at the end of the month. I like the protections they offer, the doubling of warranties they provide, the budgeting they provide, the cash back rebates or mileage I get and everything else. I'm amazed at the number of my vendors who take my credit card and are eating the fees. As long as I make sure to get that monthly check in the mail I'm getting all the benefits the credit card companies offer and they are getting nothing from me. It would be tough to opperate without them for me.

Downeast

You see alot of companies on tv offering that like new england brick master, new pro windows and some others. So they see it all the time and mabe start to think its just common business practice these days.

Bone Saw

my thoughts to the T

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Grumpy

But that is actually a partnership with a bank. I think citibank is actually the one paying Home Depot, and taking the risk hoping the customer will be the one to pay them back. The constractor (home depot in this case) isn't financing anything.

Grumpy

The only thing my parents bought on credit was their house. Even their cars they bought flat out. They never had a credit card until recently, when they wanted to rent a car and couldn't without one.

I learned real quick it's easy to get into alot of trouble with a credit card. I do not have a personal card and have 1 corporate card only for emergencies.

Grumpy

I get that crap in my mail every week. If I tell the customer I am going to defer payments on the job then I sell the recieveable to someone else who wants immediate payment, I am not going to have a happy customer and there goes my reputation.

theworx

Grumpy, I have no clue as to how they work it all. My point is the constant advertising hammering the idea into peoples brains recently (I think that's why you are getting more people asking about it than ever before).

MarkNoV

That is not factoring as I understand it. The factor is legally bound by the conditions of the note.

Credit and financing are essential tools of business, epecially for those that want to grow. It is the fundamental reason that we, in North America, don't have to eat bugs for protein, and wipe our behinds with banana leaves.

Mark

Teetorbilt

I was taught differently. First, one must know the difference between NEEDS and WANTS. You NEED a p/u truck. You WANT a new F-350 diesel, extended crewcab with all of the options and some accessories.

I save to buy what I need and want. The bank pays me for this.

I save up a few $K and buy the truck that I need. Then I start making payments towards the truck that I want. In 6 mos. I have enough to buy a CD and get a decent interest rate. 6 mos. later, do it again. In 3 yrs. I have the cash to buy what I want and the bank paid me the entire time. I buy the truck and start paying towards the next one.

The concept goes against everything that advertisers throw at us. Read 'The Millionaire Next Door'. Papaw was right all along.

__________________
You can't solve you're problems with the same level of thinking that created the problems.

Albert Einstein

theworx

Great post!!!

krthomp33

Just an idea, but instead of a low yield CD, throw your money into a money market checking account. Just dont write any checks, and your rate of return is a hell of alot higher than a CD