In today’s market, HVAC customer financing has become a critical tool for service businesses. Especially in industries like HVAC and plumbing, where the average job can run into thousands or tens of thousands of dollars.
Consider this scenario: your customer’s air conditioner breaks down or their water heater starts leaking. They need a fast solution like upgrading to an 18 SEER unit, but they may not have $12,000 readily available. This same customer may also have the funds to pay immediately, but prefers to use or invest that cash and pay the bank back over time. That’s where home improvement customer financing comes in and changes the game.
What is Home Improvement Customer Financing?
Simply put, home improvement customer financing allows your clients to break down large purchases into manageable monthly payments. Instead of paying the full amount upfront, they work with a financing provider to spread the cost over time. You get paid immediately, and your customer gets the high-quality service they need with less financial strain.
Why Should Service Businesses Offer Financing to Customers?
Financing is a powerful tool for overcoming sales objections and closing deals that might otherwise be lost. A recent Air Conditioning Contractors of America (ACCA) study called Contractor of the Future found that close rates increase by 11% when financing is offered.
But the benefits go beyond just closing more deals. Consumer financing significantly can help increase average ticket size. Without financing, a customer might settle for a basic 14 SEER AC unit or standard water heater; with it, they can often upgrade to high-efficiency equipment or premium materials.
In the same ACCA study, contractors offering four or more options saw premium equipment mix climb from 26 to 42%. By turning a one-time expenditure into smaller, palatable payments, you shift the customer’s perspective toward investing in a comprehensive, superior solution. 0% loans can be especially effective for customers in the market for higher efficiency HVAC and plumbing systems.
What Are Different Types of Financing Options for Contractors?
There are several loan structures designed to meet different customer needs. Understanding these helps you present the right solution at the kitchen table:
Short-Term Promotional Loans
Short-term promotional loans include “12 months no interest” or “18 months no interest” plans. They can be good for customers who expect a future cash windfall, such as a tax refund, or simply want to delay payment without incurring costs. If not paid within the window, high APRs typically kick in.
0% Equal Payment Loans
Equal payment loan options like “0% for 60 months” allow for very attractive marketing. However, because the lender is forgoing interest, the contractor pays a significant dealer fee to “buy down” that interest. This cost is usually built into the project price.
APR Equal Payment Loans
APR equal payment loan plans, such as “9.99% for 120 months,” are popular because they offer a low monthly payment and a low dealer fee. These are often easier for contractors to manage while keeping interest rates under double digits for the consumer.
How Does Home Improvement Customer Financing Work?
The financing process is integrated into your sales flow to ensure you get paid quickly and the customer feels supported.
Stage 1: Get Approval
The customer applies for the loan directly from your proposal or on your website. Lenders typically look for FICO scores of 680 or higher but sometimes offer counter offers at higher rates for customers with lower credit.
Stage 2: Complete the Job
Once approved, you proceed with the installation. All WEX FSM lending partners offer a digital process where the customer is approved for a specified amount, you complete the job, and then submit for payment upon completion.
Stage 3: Receive Payment
After the job is finished and payment is requested you receive payment directly from the lender. The customer begins their monthly relationship with the bank.
How to Offer Financing to My Customers?
Successfully offering financing requires a strategic approach to protect your margins and align with your suppliers.
Step 1: Align with Manufacturers
Many manufacturers (like Daikin, Rheem, Trane, and Lennox) are aligned with specific lenders like Goodleap, Synchrony, Wells Fargo, and Service Finance. These manufacturers often offer promotional rebates that cover your dealer fees during specific times of the year, allowing you to boost revenue without margin dilution. WEX FSM integrates with all of these lenders.
Step 2: Choose the Right Lender Partner
Each lender has specific strengths. Service Finance often offers the lowest fees, while GreenSky is known for high “max approvals,” allowing a customer to spend more than their initial estimate. Goodleap is known for high approval rates, while Synchrony allows you to offer multiple loan types at the same fee level, simplifying your pricing strategy. With WEX FSM you can pick the lender that is best for your business.
Step 3: Preserve Your Margins
Since lenders charge “dealer fees” (ranging from 3% to 20%+), you must account for this in your pricing. You can use a blended average—increasing all quotes by a small percentage (e.g., 3.5%) to cover the cost of those who choose to finance—or offer a cash discount for those who pay upfront.
Step 4: Make Applications Simple
The easier the process, the higher the conversion. Embedded financing on proposals, Good, Better, Best proposal comparisons and your website allows the customer to see financing within the context of your proposal, with the self-service option on your website to apply on their own. You can also text them a direct link to self-service financing.
Pros and Cons of Offering Customer Financing
Pros of Offering Customer Financing
- Increased Close Rates: Help overcome price objections.
- Higher Ticket Sizes: Customers can more easily upgrade to premium, high-efficiency equipment.
- Competitive Advantage: Stand out against contractors who only accept cash.
- Upfront Payment: Get paid by the lender shortly after job completion.
Cons of Offering Customer Financing
- Dealer Fees: Costs can reduce your profit margins if not priced correctly.
- Credit Requirements: Unsecured loans usually require strong FICO scores (680+).
Is Customer Financing Right for Your Business?
For most HVAC and plumbing companies financing is essential because it yields consistent financial results. If you are selling high-ticket items like whole-home replacements or tankless water heaters, the ability to offer a low monthly payment can be the difference between a “yes” and a “not right now.”
Improve Your Payment Collection and Cash Flow with WEX FSM
Offering financing is just one piece of the payment puzzle. You also need a field service management (FSM) solution that makes it easy to collect payments and track invoices. WEX FSM integrates these processes directly into your workflow.
Whether you are using Synchrony, Goodleap, or Service Finance for a seamless digital application or processing a standard credit card payment, WEX FSM provides the infrastructure to make it happen on the spot. Ready to increase your average ticket size and modernize your sales process? Schedule a free demo today and learn how WEX FSM can help you leverage financing to grow your business.
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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.
Copyright ©2026 WEX Inc. All rights reserved. The information in this document is subject to change without notice.
