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When Sunshine Home Pros, in Deerfield Beach, Fla., began offering financing two years ago, owner Alex Oliveira didn’t know it would have such a strong impact on his business. “Our target customer was not inquiring about it at first,” he says, “then, all of a sudden, the market was going down and everyone — even people with high income — began asking about [financing]. We would have had to cut a lot more in costs and do more to stay in business in this environment if we did not offer it,” he says.
It also helps the company compete with big box chains, most of which have always offered financing. “We get to pretend we are really big — or at least have the same kind of tools as the big guys,” Oliveira says.
Beginning in 2007, clients who called about the flooring and kitchen and bath remodeling the company offers would ask three questions: How much will this project cost? Do you offer free estimates? Do you offer financing?
Through GE Financial, customers can apply for zero down and 0% interest for a period ranging from six to 24 months. If the customer qualifies and accepts, Oliveira pays a percentage of the total amount they spend, ranging from 0% to 8%, which GE collects monthly by deducting it from Sunshine Home Pros’ checking account.
Most of Oliveira’s customers choose a six- to 12-month period. “Customers who want 24 months — that is not our target market,” he says.
About 20% of his clients use the financing, but the “best” segment, Oliveira says, is customers with a combined annual income of $100,000 to $150,000; about 50% of them use the financing.
The remodeler does not allow financing on discounted materials. “If they ask for financing, I do not want to sell them my cheapest products,” he says. “I try to take them to a higher-end product with a higher profit margin so I don’t lose as much money.”
Clients fill out the applications in the showroom and, using GE’s terminal, Oliveira runs a client’s credit card and tells them within a few minutes if they qualify. He can also call GE from the customer’s home and receive an answer. The client receives a credit card in the mail with the Sunshine Home Pros name on it; the card can also be used at the showroom to purchase cleaning products or accessories. GE bills the customer directly.