“I don’t care what car they’re driving. I don’t care what their house costs. You don’t know what’s going on in their background. So, when you present your price, give them payment options, and let them pick the one that works best for their situation.” — Chuck Upshur, Senior Vice President and Director of Business Development at Service Finance Co., a ServiceTitan partner
Consumer financing has changed a lot during the past few years.
Coming out of the COVID-19 epidemic, interest rates rose dramatically. Homeowners accustomed to decades of low or even no-interest payments on home improvement loans suddenly faced rates as high as 7%, 8%, and 9%.
The resulting sticker shock creates new challenges for businesses that offer on-site financing for home improvement projects. But Chuck Upshur says homeowners still need financing, even though they may be hesitant—and, in some cases, even offended—when they receive an estimate with that big interest rate number.
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Upshur is Senior Vice President and Director of Business Development for Service Finance Co., one of ServiceTitan’s integrated financing partners. He spoke during a 2023 Pantheon session titled, “Unlock Financing-Led Business Growth With Service Finance.”
Service Finance works with ServiceTitan to bring innovative financing platforms to dealers, helping companies improve closing percentages during in-home sales.
“Money for financing was essentially free over the last 12 to 13 years, and people got accustomed to that,” Upshur says. “Now, banks are lending to each other at 5½%, so prime lending is around 8½%. Go into some people’s homes and offer them 8½%. They will say, ‘Oh, how dare you.’”
Give the Customer Options
Upshur is a former in-home services salesperson and knows the value of closing a deal on first contact. Interest in big-ticket home improvement items declines over time, he says, so that initial interaction is critical.
Service Finance prides itself by helping companies offer a variety of loan options they need to sell products. The needs of every customer is different, so providing alternatives is the best way to get to the desired result—a sale.
“Our whole staff, from the founders all the way through our sales team, has done this for a living,” Upshur says. “We pride ourselves in helping people close.”
One solution Service Finance offers is risk-based pricing, where dealer fees don’t change but customers get an adjusted rate based on their individual credit scores.
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“If we raise our rates to you, what are you going to do?” Upshur says. “Raise your prices and pass those costs on to the customer. That affects your closing average.
“Instead, we lock the fees and pass the risk onto the consumer. A customer may want a 7% or 9% rate, and if their credit score qualifies, we will give it to them. Otherwise, they will pay a higher percentage fee.
“The result is your profit and loss as a company is not affected, and the salesperson’s commission is not affected,” Upshur explains.
Instead of applying a flat interest rate across all customers, Service Finance researches the individual and applies an appropriate number. This is the same process customers are used to following when applying for home and car loans.
And as the federal reserve continues to decrease rates in 2024, customer rates will decline as well without affecting the company’s bottom line.
“We do what we do to make sure we keep your P&Ls intact,” Upshur says.
Service Finance also offers a true 12-month, no-interest loan promotion where interest does not accrue until the grace period ends.
A customer who finances $15,000 and pays back $10,000 over the first 12 months will only see interest on the remaining $5,000 owed. This is a big selling point at kitchen tables, even if a higher interest rate kicks in.
“We do not go back to Day 1,” Upshur says. “People can use this financing like a bridge loan, and this will drive their buying decisions. Some people don’t like to pay interest, and why not present them with this choice?”
Another Service Finance option is hybrid loans where the first payment is deferred. People who need an HVAC system installed or other big project but don’t have the money right away can push the payment down the line, for instance, after receiving a holiday bonus, tax return, or disaster relief check.
“We can get them taken care of today and put the customer at ease,” Upshur says.
Easy and Quick To Use
Service Finance delivers its loan proposal tool to every ServiceTitan user. A sales representative in the field gains access to all promotional and payment options to fit the situational need.
Simply input the homeowners’ information and access the rates. This way, financing options are open and upfront right at the spot of the sale. A customer can pick the program that best suits their needs, relieving the salesperson from guessing what financing options might work best.
“I don’t care what car they’re driving. I don’t care what their house costs. You don’t know what’s going on in their background,” Upshur says. “So, when you present your price, give them payment options and let them pick the one that works best for their situation.”
Service Finance’s system delivers terms in contract length and monthly payments, which are the two points most buyers want to see most. Some people prefer to pay an extra year if it means cutting the monthly payment, whereas others would rather complete the loan quickly.
Salespeople are not there to judge the clients’ financial situation, Upshur says. They are there to close the sale.
Service Finance helps with that by meeting customers where they are and providing multiple options for getting to the financing they want.
The worst thing that can happen is walking away from a potential sale because the customer doesn’t like the numbers and wants to “think about it.”
“I love the one-call close,” Upshur says. “We never want to go back. We want to close that first time because chances will never be that high again.”
ServiceTitan’s financing integration with Service Finance allows your technicians to offer financing in the ServiceTitan app - all at no additional cost for ServiceTitan users.
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