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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.

S and P EXPERIAN CONSUMER CREDIT DEFAULT COMPOSITE INDEXWhile 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:

  1. Sell a monthly payment instead of a lump sum.
  2. When cash or credit cards are not available to pay for your product and/or service.
  3. Overcome customer objections by using Promotional Financing Options such as Same-as-Cash or No Payment periods.

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.