3 HVAC Mistakes That Are Costing You Money

Offering financing can make the difference between closing or losing a sale, but you must do it effectively. Too often, contractors fall into three common traps: clinging to old ways of doing business, not partnering with the right lenders, or not being ready to offer financing. Read on to learn how to avoid these pitfalls and close more jobs.

Mistake #1: You Are Stuck in the Past

Consumer behavior is constantly changing. Keeping up with the trends will help you understand your customers' financial needs to better serve them.

Financing options are available everywhere these days. In the past, homeowners may not have used financing as frequently, but times are changing. Have you noticed that you are asked to sign up for a credit card every time you buy something, or the company breaks the amount into smaller payments?

There is a good reason for this. A recent Bankrate study found that 27% of Americans have no emergency savings, and 59% of people wouldn't pay for a $1,000 emergency expense with savings. This data tells us that Americans are struggling in the current economy. They increasingly use credit to make purchases because they don’t have savings or don’t want to dip into their savings.

People also use financing to increase their spending power. Homeowners may want a better unit but can't afford to pay for it in one lump sum. Breaking the purchase into monthly payments allows them to upgrade their system with a minimal difference in their monthly payments. While they may not want to hand over thousands of dollars at once, providing them with payment options makes the purchase price easier to accept.

Even if it’s not something you have done in the past, you should start offering financing as a payment option every single time. If you don’t offer financing, you will lose business to someone who does.

But not all lenders are the same. You need to understand how lenders operate to ensure your homeowners' loans can be approved, and this leads us to the next mistake.

Mistake #2: You Are Not Expanding Your Lending Partner Network

Some lending partners only lend money to homeowners with top-tier credit scores. If that’s the only lender you use, you might see a lot of declines. The key is understanding how companies lend money; that way, you can learn how to increase those approval numbers. There are two main types of lenders you will work with for HVAC customer financing: large banks and specialty lenders.

We’ll start with the large banks. The top five HVAC manufacturers partner with these banks to provide lending solutions you can offer to homeowners. These lenders have higher eligibility requirements for contractors to use their services, and they typically service credit scores in the prime and superprime categories. These borrowers have a credit score above 660 and are considered the least likely to default on a loan.

That is fine for homeowners with good credit profiles, but it may result in a decline for anyone below those top-tier credit scores.

Specialty finance is the second category of consumer lender available to HVAC businesses. These non-bank lenders assist borrowers not supported by traditional banks, lending money to those who may be considered credit invisible (someone without an established credit history with the three major credit bureaus, so they don’t have the data needed to generate a traditional credit score) or people with a shorter credit history.

These specialty finance companies focus on specific industries, like HVAC and home improvement, and have more flexible registration requirements for the business owner. This is what we do at FTL Finance! We work specifically with contractors to offer HVAC customer financing. While big banks take a one-size-fits-all approach, specialty lenders, like us, are smaller and provide more personalized service to contractors and customers. At FTL, for example, each contractor has a dedicated team member to support them. You won’t have to talk to a different person every time you call. Larger banks can’t provide this kind of personalized service.

If you only work with a big bank lender now, adding another lender provides options for homeowners who fall below the prime and super prime credit tiers. So, now that you’ve decided offering financing and expanding your lending network are great ideas (right?), let’s talk about how to get ready to do it.

Mistake #3: You Are Unprepared to Offer HVAC Customer Financing

You wouldn’t send your techs into a job without the right tools. The same is true for financing. Your team needs the right training and resources to confidently talk to homeowners about their options.

We know financing can be intimidating. That's why FTL provides sales training to make sure everyone on your team knows how to start the financing conversation with homeowners and navigate difficult questions. We want you and your staff to have all the information you need to speak knowledgeably to customers.

Training is just the first step; having the right tools makes it even easier to use the knowledge. We offer two digital tools that support the sales process: AppTracker and the Project Estimator. The Project Estimator creates different equipment and service estimates, presenting multiple options for homeowners to consider. It also acts as the loan application, which makes the application process efficient.

AppTracker keeps everything simple by showing you where each homeowner’s application stands. Since FTL usually gives decisions within 15 minutes during business hours, you can quickly update your customer on whether they’ve been approved. And, once the job’s done, AppTracker lets you know when the loan’s been funded, so you’ll always know when the money’s on its way to your account.

When your homeowners have questions, our customer service team is here to help with the loan application process. That way, you and your techs don’t have to worry about it. Think of us as part of your team.

Why You Need to Offer HVAC Customer Financing ASAP

Customers expect payment options. Some will even search online for an HVAC company that offers financing and base their decision solely on that. Not offering financing could mean losing those customers.

Once you do start offering financing, make sure your customers know about it. Since 62% of HVAC shoppers search online before making a decision, it’s smart to make sure your payment options are on your website, business listings, and social media. A simple message like, “We accept cash, credit, and offer payment options”, can make the difference between getting a call or getting overlooked.

To stay competitive, it’s important that homeowners who want financing can get approved. Expanding your lending partner network helps make that happen. Want to learn more about offering HVAC customer financing? Reach out to us today.