Remodelers’ experience with brokers varies. Allyn Harth of Harth Builders in the Philadelphia area provides financing through GE Money’s sales finance division and GB Home Equity. Before contracting with those lenders, he was approached by a number of brokers whose comparatively high interest rates — he saw numbers ranging from 12% to 25% — scared him off.
Others say that a broker who understands the home improvement market can be a great asset. “A broker knows how to match the customer with the right bank, based on that customer’s needs,” Weickgenant says.“The same way that we know how to match them up with the right tradespeople.”
Q: How much training do you need to sell financing?
A: Most lenders provide both an initial training session and ongoing support. The content and extent of the initial training vary by lender but could include everything from product types (what to offer when) to how to incorporate financing into a sales proposal to how to process the paperwork. Geoff Chang of KeyBank Home Improvement says the company’s account executives usually spend two hours training a new dealer’s salesforce.
This may not sound like much of an introduction, but lenders say that remodelers don’t need a lot of knowledge. The lender does most of the heavy lifting and will teach the remodeler’s salespeople everything they need to know, including how to make the offer and how to read a credit chart with APRs, ticket sizes, and monthly payments.
Q: How much information do you need to ask customers?
A: First-tier lenders say that, for the customer, the application process requires more information than a credit card application, but a lot less than a mortgage.
If you have multiple lending sources, it’s a good idea to qualify customers yourself. For instance, Murphy asks customers basic questions about income, debt, equity in the home, and credit history. This information helps him decide which lender to steer the customer toward, reducing the chance of rejection.
Q: Does the remodeler have any liability if the borrower defaults on the loan?
A: Remodelers aren’t liable if the customer defaults unless, of course, they are offering some sort of in-house financing (see “Loans of Your Own,” page S86). However, the finance company can hold the contractor responsible for getting the work done. “If a customer complains, and the contractor chooses not to fix the problem, then I can ask him to buy the loan back,” says Bruce Christensen, vice president of GE Money’s home improvement division. “But we have found that even if a customer does log a dispute, 96% of the time it’s resolved in favor of the contractor.”