Good news for home improvement dealers and contractors utilizing financing to help close sales: Industry trends indicate consumers continue to invest in home improvements; the use of credit by consumers continues to grow and the default rates remain at low levels. Specific to home improvement – both Home Depot and Lowe’s reported positive earnings last week for the quarter ending in July. Home Depot’s comparable U.S. stores sales increased 5.4% on an annual basis, and Lowe’s grew 1.9%.
Recently released data from the Federal Reserve shows that consumer credit grew at an annual rate of 5.25% in the second quarter of 2016. The third quarter likely got off to a positive start as the economy added 255,000 jobs in July.
While the home improvement market and use of credit continue to increase, the performance of consumer credit remains solid. Recent data from the S&P/Experian Consumer Credit Default Index shows a default rate of 0.83% at the end of July 2016 which is down from 0.92% in July 2015 and 1.35% in July 2013. The continued positive trends in the performance of consumer loans and credit should bode well for credit availability for contractors and dealers using it to close sales.
As a quick reminder there remain a number of compelling reasons to use financing to close additional sales. Those include:
Dealers and contractors that successfully utilize financing close over 70% of their total sales using financing. So if your close percentage is lower please give us a call and we would be happy to share with you some ideas on how to increase your sales using financing.