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Meeting Summer Needs with Effective Financing

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Every state in the U.S. recorded a warmer-than-average year in 2017, including 32 states that posted a top-10 hottest year on record. Regardless of their region or state, air conditioning contractors around the country should be prepared for the busy summer months by ensuring they are able to meet customer needs with effective financing.

It is increasingly urgent for families to make needed upgrades or replacements in their HVAC system this time of year. Whether a customer wants to ease the month-to-month cost of running A/C by purchasing a more efficient system, or they simply need to replace a broken unit, financing allows them to afford the big-ticket purchase and establish comfortable payments instead of shoveling out large sums of cash at once. By offering a comprehensive and flexible financing program that serves a diverse range of customer needs, contractors gain a competitive advantage to close more sales during this busy season.

Energy-Efficient Upgrades

As summer temperatures continue to rise, so does the cost of cooling a home with an antiquated HVAC system. To remedy this, customers often want to modernize their older systems and/or upgrade to the the latest energy efficient technology. However, the latest and greatest systems will also cost the customer more money, making financing essential for customers who either cannot or would prefer not to spend that much cash up front.

While prime financing options are a fairly common solution to this problem, prime credit is only extended to customers with qualifying FICO scores, which could disqualify the more than 43 percent of Americans who have FICO scores below 700 (according to Many in that 43 percent are viable customers with cashflow to make the purchase and afford financing payments, including those who may have had some prior incident negatively affecting their credit history, which often dates back seven years.

However, contractors that offer a two-tier financing program are able to close sales to this large segment by offering the chance to apply through a second look financing provider, such as Fortiva Retail Credit, which assesses information beyond a FICO score to approve 25 to 50 percent of customers who were previously declined by a prime financing application.

Prime financing and second look financing work alongside each other to help air conditioning contractors close more sales by enabling both customers with prime credit scores and credit-impaired customers to purchase needed upgrades. Prime credit providers are often able to offer attractive zero-interest options that essentially enable customers to extend the up-front cash payment out for several months. Second look financing helps customers who do not qualify for the prime program to make needed upgrades to meet the energy efficient, cost-saving goals ahead of the summer months.

In addition to helping to close more sales, robust and flexible financing options will also allow customers to purchase bigger-ticket systems they might not have considered. Instead of purchasing the most affordable upgrade available, customers are more likely to purchase more advanced technologies when they are given the opportunity to cover the up-sale with monthly payments.

Need-Based Purchases

During summer months, a broken air conditioning system can present a serious problem, including health concerns in particularly hot areas like Arizona or Florida. To make matters worse, the Federal Reserve found that 46 percent of Americans would not be financially prepared for an emergency costing $400 or more, meaning many would be unable to afford this unexpected repair or replacement.

When a family has an air conditioning malfunction during the hottest time of year, it often becomes a need-based purchase. This is especially the case when small children or elderly family members are involved. Financing is crucial for contractors to ensure they are in a position to help these families and close the sale, but those who do not offer a two-tier financing program will be forced to turn families away if they do not qualify on the prime financing application.

Competitive Advantage

Many families proactively choosing to make an upgrade to their air conditioning system value financing because of its ability to make the purchase less costly upfront. It also enables customers to purchase better, more expensive air conditioning solutions than they could afford with cash, which is a win-win for buyers and sellers.

In the case of emergency purchases, financing is absolutely essential to cover this costly repair or replacement on short notice. Financing gives contractors the ability to assist families with this often need-based purchase, which is also a win-win.

These benefits are boosted even further when they can be extended to the massive segment of shoppers with a two-tier financing program that extends flexible options to those whose FICO scores may be less than prime despite their ability to afford financing payments.

Whether it is an upgrade or emergency purchase scenario, two-tiered financing provides a competitive advantage. If a family can’t qualify with a contractor who only offers prime financing, they will take their business to a contractor with second look financing because quality air conditioning is too important, especially during the upcoming summer months.

Bob Maisel

Posted In: Money

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