So you need to improve your home and you need help financing it, but it’s all new to you. You’re not sure if you know everything you should about your contractor or your loan terms. It sounds easy and convenient to finance through the contractor, but he’s not very straight forward about the terms of the agreement. I can help. Read on and I will tell you everything you need to think about before signing onto that loan.
Was It Used As A Sales Tool?
One thing you should always pay close attention to is the way the contractor talks about his financing plan. Chances are, if it sounds too close to a sales pitch, it is a sales pitch. Which also means they’re going to be over-charging you. As I explain all over this website and in this article, financing offered by contractors is usually a sales tool that results in a higher project cost to you. The reality is that you would be best served getting your own financing, and negotiating a cash discount!
What’s The Interest Rate?
A lot of contractors, in trying to make the sale, will try to hide the interest rates or other fees in the financing they’re offering. Don’t let them get away with this and screw you over financially. Make sure you know what you’re getting into so you can back out and use a 3rd party if necessary.
There’s A Secret Merchant Fee.
You can end up overpaying for products and/or services with the contractor all because they have a pesky merchant fee to offer you the financing. You seem, on the backend of the deal, the financing company charges a fee to the contractor. Of course, ‘they’ don’t pay it. You pay it indirectly through a higher project cost. They won’t come out and say it directly, but you can see evidence of it on the websites of companies that provide financing solutions to contractors.
Will I Have Access To Things Online?
In modern times, mobile banking isn’t a luxury, it’s a must. You need to be able to see your terms, the money you’re getting and when, and monitor all these things at all times. Unfortunately I’ve found that some companies don’t offer online login access for their customers (in 2017 WTF!?).
How customer-friendly is the financing company?
Like I said previously, the companies the contractors work with are often less than ideal. They usually have poor reviews because of their treatment of customers, hidden fees, or lack of transparency. Be sure to do your due diligence on the financing company you will be financing through as you might find things aren’t always ethical!
When considering a loan from the contractor, make sure you know all you need to know. Ask them about and pay attention to these five things to assure you don’t get ripped off. Their answers to these questions may drive you in the direction of an outside financier that’s more transparent with their terms and better suits your needs.