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Improving The Home Improvement Financing Experience


Hans Zandhuis is the head of Ally Lending, based in Charlotte, North Carolina.

Since the onset of the pandemic, the number of home improvement projects has sharply increased. In fact, 74% of homeowners planned to work on their homes in Q3 last year, up 4% from a year before. These projects range from upgrades to work-from-home spaces and home offices to outdoor kitchens and pools, to name just a few. 

However, labor and supply shortages threaten to adversely affect plans for both home improvement professionals and homeowners through cost increases and delays. This can be especially problematic when unexpected emergency projects pop up, costing homeowners thousands. When the industry faces challenges like these, financial flexibility and fluidity become essential for the homeowner as well as the home service provider.

From Hardhat To Financier’s Hat

Helping people afford their construction projects is a key capability for today’s builders, but not all builders and contractors have that training. According to industry professionals, the best approach is to educate yourself and your customers on all of their options. This starts with home technicians offering financing to the clients themselves, with many banks and financial partners providing easy-to-follow materials and resources to help.

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Transparency is key to building trust with the homeowner and ensuring they are comfortable and well-informed of their options. Not every option is right for every customer, so it’s important to help them find the best fit for them and their individual financial situation.

Why Financing Is Key To Home Improvement Success

Offering financing to homeowners benefits the home improvement industry in three fundamental ways:

First, presenting financing helps ease the often uncomfortable money conversation by providing options. Home improvement professionals can introduce a variety of financing solutions right at the kitchen table. While the budget is still discussed and agreed on between the contractor and the homeowner, financing takes the burden off of home improvement professionals to figure out a payment plan or chase clients for late payments. Instead, financial institutions that offer installment loans usually handle those communications and manage the payments.

Second, financing is flexible. Being able to offer personalized financing allows home improvement professionals to build trust and close the sale.

Third, financing is budget-friendly, which is crucial when homeowners are faced with unplanned emergencies, such as a leaky roof or broken HVAC system. According to iProperty Management, in 2018 one in three homeowners had to complete an emergency improvement, with an average cost of $1,206. With budget-friendly, personalized financing, homeowners aren’t forced to put off or avoid urgent home needs. Installment payments with low interest rates provide a financing cushion for pricey projects that can’t be put on the back burner.

What’s Next?

There will be continued growth in home improvement projects well into 2022, regardless of current supply chain issues and material costs. Lumber prices, for example, skyrocketed last year, then came back down, but are still at an all-time high.The Home Improvement Research Institute predicts the total U.S. building products market will continue the growth seen in 2020 and 2021 as Covid-19 restrictions ease and projects once on hold resume. This also means demand for certain products will continue to increase in places where contractor-led projects are popular.

Offering budget-friendly financing options will help tackle ever-rising costs. Home professionals will need to embrace newer financing options if they seek to offer customers an efficient home improvement process and grow their business.

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