Why Home Improvement Contractors Need an Experienced Lender

The Lender’s Role

buy a home often needs to coordinate with a realtor, lender, seller, title company, etc. Although the buyer may not have direct contact with some of these groups, all may be necessary for a smooth acquisition.

Similarly, home improvement contractors act as a middleman to support the needs of homeowners. From outsourcing subcontractors and suppliers to offering financing plans, contractors strive to make the home improvement process as simple and painless as possible. Otherwise, customers may feel overwhelmed by all the individual components that go into what might seem to be a simple project.

The role of a lender is simply to make a large project possible for homeowners who can’t or don’t want to pay cash. Homeowners usually want to know an estimate of the overall cost of the project before a contractor gets started. Often when they see a big number in the thousands or tens of thousands, they become hesitant to move forward. How will they pay for a bathroom or kitchen remodel on top of a house payment, car payment, kids, insurance, entertainment, etc.?

Luckily, an experienced lender transforms this big number into manageable payments. By offering financing options, homeowners can see the monthly plan and work that into their stable budget. So, to put it simply, a lender’s role is to help buyers finance projects, and thereby help home improvement contractors sell more projects. Since financing is typically arranged at the beginning of a project, a discussion about payment plans right from the start will help customers know whether the project is affordable.

Overcome Objections

As we mentioned, the primary function of financing is to enable contractors to close more deals, while empowering homeowners with workable payment options. It’s common for contractors to be nervous about providing a quote to a homeowner, since it may be difficult to predict costs precisely.

The “sticker shock” of the price can lead consumers to have second thoughts about a project. However, contractors that bring up financing early in the discussions can have more success. This prepares the homeowner and helps establish expectations early. In many cases, it can also encourage homeowners to be more flexible with a contractor’s recommendations for additions or upgrades, because it only adds “x” amount to the overall monthly payment.

Reduce Risk to Contractors

With so much uncertainty, it’s nice to work with a reliable, experienced lender. With increasing inflation, customers may be more interested in payment options as they seek to fulfill their dreams.

Working with an experienced lender means satisfied homeowners, and allows contractors to take on new projects without having to finance them. If you are interested in working with Medallion Bank, please contact our team today to learn more about our credit evaluation process.