To Finance Or Not To Finance - Business - Contractor Talk

To Finance Or Not To Finance

 
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Old 05-06-2010, 02:58 PM   #1
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To Finance Or Not To Finance


I looked over some options provided by GE money. They offer business solutions for contractors to offer customers 12 months no interest finance. The perks are; you get paid quick, qualify customers in minutes over the phone or online, no worries about account receivables

The downside; They get a 10% kick back from the contractors, you would have to raise your prices to keep up with overhead/profit,

Has anyone tried financing solutions? Hows it working out for you guys?
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Old 05-07-2010, 11:22 AM   #2
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Re: To Finance Or Not To Finance


no one finances?

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Old 05-07-2010, 12:20 PM   #3
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Re: To Finance Or Not To Finance


We tried it in our roofing business, but user acceptance was pretty low, so ultimately we did away with it.

That 10% you reference is negotiable.
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Old 05-18-2010, 04:12 PM   #4
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Re: To Finance Or Not To Finance


I know a guy that tried the GE thing and it worked good for him. But everyone is different.

I'd rather not borrow money unless I absolutely have to. But if you need cash quick, depending on your state, you can check out borrowing against your vehicle for a short term loan. I know lots of guys who do it to pay for rental equipment for particular jobs. It's risky cause if you don't pay it back you lose your truck. There's a company in Virginia called CashPoint that's supposed to be good.

- Herk
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Old 05-18-2010, 04:40 PM   #5
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Re: To Finance Or Not To Finance


We did lease financing through various providers so that clients did not have to put out a lot of money at once. However, these were security projects such as CCTV, Alarms, Access and so forth. Nothing for general construction cus we don't do that. Nor have I done financing for electrical work.

Financing for the things I mentioned worked because often the equipment was fairly expensive.

The normal terms were 3 yrs, 4yrs or 5yrs. The deposit was 1st and Last Month's payment.

The interest rate was pretty high, but it was better than plunking down 10 to 50 thousand right away.

However, we haven't done this for some time. Banks that used to offer these leases/loans have mostly disappeared. There are still some leasing/finance firms that do --- but the interest rates are still high and the qualifying has gotten much stiffer ---- almost to the point that no one qualifies.

Good points are: We got paid in full right away, and, the client was good with paying 200-600 dollars a month rather than thousands right now.
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Old 05-22-2010, 02:15 AM   #6
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Re: To Finance Or Not To Finance


i wonder what percent of consumers actually finance on home improvement projects.
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Old 05-22-2010, 09:44 AM   #7
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Re: To Finance Or Not To Finance


10%????

I am switching over to GE money and its at 3%. I would say that over 60% of my customers finance either it be a credit card or through a loan with no interest such as GE money.
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Old 05-22-2010, 11:45 PM   #8
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Re: To Finance Or Not To Finance


you're not actually borrowing money from GE money. you qualify your customer to get them approved for financing. it takes about 15 to 20 min. once approved, you submit contract to GE money and they'll send funds to your bank account. the 0% financing for 12 months option will cost you 10%.
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Old 05-23-2010, 04:04 AM   #9
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Re: To Finance Or Not To Finance


Quote:
Originally Posted by contractorjay View Post
you're not actually borrowing money from GE money. you qualify your customer to get them approved for financing. it takes about 15 to 20 min. once approved, you submit contract to GE money and they'll send funds to your bank account. the 0% financing for 12 months option will cost you 10%.
Yes. It is tricky... we utilize finance with restraint, but we do use it as often as possible. Firstly as everyone is saying, or will say... it ain't universally available. The HOs that NEED it don't get it and those that can get it don't WANT it. So you cannot go around talking finance to folks from minute one, we gotta know it is available to this or that specific HO. I have read some here saying they prescreen before the appointment, then blow off the HO if they need but cannot have- we don't work that way. The decision is made in the home- we scratch around a bit and we tend to smell credit acceptance prior to phoning any deal through... I love retired couples!

Next, forget the percentage (simply factor it in from the outset, if finance is going to be in your sales kit)... think of it simply as a sales tool, not the way we used to think, ie; to help the HO afford the job. Sales tool? - 6 or 12 months interest free is all we use

We even talk about the 'evils' of finance through the presentation, most folks agree and it gives a good opening to chat about the greedy this and that, heck! even some contractors are like this, but the way we operate is... kinda thing

All this negative talk and then when they discover the job is going to be a touch more cash than they hoped, then of course slowly and after a slow recap etc... out comes the 6 or 12 months interest free plan which has been implemented for situations just like this, we cannot- of course -guarantee that the HO will qualify, even my Uncle Tom who has perfect credit was turned down (for no reason), how is the HO's credit? - would they like us to establish if this facility might be available to them? - can I use your phone? (I never use my cellphone for the call)

Yes, at this stage and the deal is done... everything else is padding

Hope you got the gist of that contrJ, my 2-cents would be... use it, use it sparingly (with experience re who will and who will not qualify), and use it as a closing tool- then great! go for it! - and if GE are offering you a facility, take it, they have been turning away more contractors than ever from what I hear. Five years clean accounts is the start point from memory
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Old 05-25-2010, 03:17 AM   #10
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Re: To Finance Or Not To Finance


We use GE. They're a litte tight on approvals. I'd say 85 percent of our business is financed. We range between 5-10% finance fee. Just build it in.

We also use Wells Fargo Home Improvement Finance. They buy alot deeper than GE but they're payment factors are higher.

We call it in to GE. If denied then Wells Fargo. I've had plenty of folks denied through GE then picked up by Wells.

Average interest rate is 9%
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Old 05-26-2010, 11:59 PM   #11
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Re: To Finance Or Not To Finance


sooo... up the cost by 13% and finance?
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Old 05-27-2010, 03:38 AM   #12
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Re: To Finance Or Not To Finance


Here's a scenario...

I had a window lead tonight. After figuring everything out I needed to write it for $10K.

GE had a dealer fee (what it costs me) to use their 9.9% program of 7% so I added $700.

I quoted the HO $10700.00 to do their job.

I simply said, "The total investment for your improvement is $10700. If you'd like to finance this project we go through GE Money Bank. Your monthly investment would be $134/mo at 9.9% or you can fund it upon completion...which would make this a reality for you?"

The HO said, "I'm going to pay cash."

"Great! I'll get started on the paper end of that. All I need is a little info for a funds verification,"

Even though I still had the $700 built in for financing I left it in. The HO's where happy with the price so why take it out?!?!
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Old 05-27-2010, 05:02 AM   #13
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Re: To Finance Or Not To Finance


What is your inner self telling you to do... Sounds like you already know the answer... Do what is right.

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