The Contractor’s Guide to Customer Financing: Tiers, Lenders vs. Platforms, Credit Bands, and What 0% Really Costs

The short version: Customer financing for contractors (what the lenders call consumer financing) is the single biggest lever on your replacement close rate and your average ticket, and it is also one of the most misunderstood costs on a contractor’s P&L. This guide covers why it matters, how the three tiers of financing fit together, the difference between a lender and a platform (and why it changes who gets paid), what credit score bands actually mean for approval, how much the fee on a 0% promotion really costs you, and how to run financing as a managed part of the business rather than a button a tech presses when the customer flinches.

Why Customer Financing Matters More Than Most Contractors Think

Start with the customer. Roughly 37% of American adults can’t cover a $400 surprise expense without borrowing, according to the Federal Reserve’s household survey. A full system replacement runs $10,000–$16,000 installed, and well above that for heat pumps and high-efficiency equipment. When a homeowner’s system dies in July, the question isn’t whether they want to fix it; it’s whether they can write the check. If you can’t turn $12,000 into $189 a month on the spot, the sale goes to the contractor who can, or it becomes a $900 repair that buys the homeowner another year and buys you nothing.

The numbers bear this out. In ACCA’s survey of more than 1,000 contractors, the average install close rate was 43%. Contractors who offered financing on every job closed around 49%; those who didn’t offer it closed closer to 38%. Shops that always offer financing also finance 18 percentage points more of their replacement sales than shops that “sometimes” do, and they sell fewer base-model systems (35% of sales vs. 50% for shops that never offer it). Same leads, same techs, bigger tickets, more of them.

From the buy-side, the reason we care is simpler: financing penetration is one of the first things a buyer’s diligence team looks at, because it is a proxy for how well the sales process is run. A $10M company financing 15% of replacements has a sales problem a buyer can see from the P&L. A company financing 45% has a repeatable process. Over 12 months that difference is hundreds of thousands of dollars of EBITDA, and at a 6x–9x multiple it is seven figures of enterprise value.

There is also a cash flow reason. A point-of-sale lender funds the contractor within one to three business days of job completion. That is faster than most commercial customers pay, faster than many homeowners pay on a progress-billed install, and it means a financed replacement is effectively a cash sale for working-capital purposes.

The Three Tiers of Financing

Think of consumer financing as a stack. Each tier catches the customers the tier above declined, at a higher cost and with different mechanics. The goal is to have all three in place so that nearly every homeowner who says “yes” gets an approval, and to know exactly what each one costs you.

Tier 1 — Prime (Primary Lenders)

These are the banks and specialty lenders that approve customers with good credit, typically a FICO score of 700–720 and up. Synchrony, Wells Fargo, GreenSky, Service Finance, GoodLeap, and Financeit are the names you’ll see on most manufacturer dealer programs. Wisetack sits at the lower edge of prime (roughly 660+) and is the default in many field-service CRMs.

Tier 1 is where the promotional products live: 0% for 12, 18, or 24 months, deferred interest, and “same as cash” offers. The customer gets a great rate and the contractor pays for it through a dealer fee, which is the subject of its own section below. Approval rates at a single prime lender are usually 50–65% of applicants in a residential service customer base.

Tier 2 — Second Look (Near-Prime and Subprime)

When the prime lender declines, the application goes to second-look lenders — specialty finance companies that underwrite scores in the 580–680 range, charge the customer a higher APR (often 15–30%), and usually charge the contractor a lower or no dealer fee because the interest carries the cost. Most contractors never deal with these lenders directly. They reach them through a multi-lender platform: software that takes one application and routes it to a network of lenders in sequence until one approves. Turns (the second-look option built into ServiceTitan), Finturf, and FinMkt are multi-lender platforms, not lenders — Turns, for example, holds no loans itself; it sits behind your prime lender and passes a decline to its network of second-look lenders and, at the bottom, a lease-to-own provider. Hearth’s marketplace plays a similar routing role for personal loans and reaches down to about 550. The platform earns a fee from the lenders (and sometimes a subscription from you); the lender that approves the customer is the one that funds the job.

Second look is where approval rates go from 55% to 85–90%. For most residential shops it is the difference between financing being a nice option and financing being the way a third of your replacements get sold.

Tier 3 — Lease-to-Own (No Credit Floor)

Acima, Snap Finance, Koalafi, and similar programs are not loans. They are lease-purchase agreements: the provider buys the equipment, the customer leases it with a purchase option, and ownership transfers at the end or at an early buyout. There is no credit score floor, approvals are near-instant, and limits run roughly $300 to $5,000 over 12–18 months. The total cost to the customer can be close to double the cash price if they run the full term, though most programs offer a 90-day early buyout at or near cash price plus a small fee.

Lease-to-own was built for furniture, tires, and electronics, not installed mechanical systems, and the ticket caps make it a poor fit for a full replacement. Where it earns its keep is repairs and small installs — a $2,800 compressor, a water heater, a panel upgrade — for the customer who would otherwise say no entirely. Use it as the last catch in the stack, and make sure your techs understand it is a lease so the customer isn’t surprised. You usually don’t need a separate lease-to-own enrollment: multi-lender platforms like Turns and Finturf include a lease-to-own provider as the final step of their waterfall (more on that below).

Lenders vs. Platforms — and Why It Changes Who Gets Paid

This is the distinction that trips up the most owners, and it has direct accounting consequences.

A lender underwrites the loan, holds the paper (or sells it), and pays someone. Synchrony, Wells Fargo, GreenSky, Service Finance, GoodLeap, Wisetack, and the second-look lenders behind Turns are lenders. A platform is software that routes an application to one or more lenders and collects a fee for doing so. Hearth, Finturf, and FinMkt are platforms; Turns is a platform that runs a lender waterfall; ServiceTitan’s financing module is a platform layer over whichever lenders you’ve enrolled with.

The practical difference is where the money lands:

Point-of-sale (merchant) financing pays the contractor. With Synchrony, GreenSky, Service Finance, Wisetack, and the Turns waterfall, the customer applies for a loan tied to your job, you submit a completion certificate, and the lender deposits the loan amount — minus the dealer fee — directly into your bank account within one to three business days. You never invoice the customer for the financed portion, you never chase them, and the lender owns the collection risk. This is true consumer financing in the sense a buyer’s diligence team means it.

Marketplace platforms like Hearth pay the customer. Hearth connects the homeowner to unsecured personal-loan lenders (the same lenders that advertise debt-consolidation loans). The customer is approved for a personal loan, the funds are deposited into the customer’s bank account, and the customer then pays you the way any cash customer would. Hearth charges the contractor a flat annual subscription instead of a dealer fee, which is the headline benefit. The trade-offs: you are still collecting from the customer, the loan isn’t tied to the job (nothing stops a homeowner from using it for something else), there is no completion certificate or staged funding, and the customer sees a real APR rather than a 0% promotion. For a contractor with a strong collections process and mostly prime customers, it can be the cheapest option per funded dollar. For a shop that wants financing to behave like a cash sale, it is not the same product.

Finturf and FinMkt sit between the two models depending on which lender in their network approves the customer; some pay the merchant, some pay the consumer. Ask every platform the same question before you sign: “Who receives the funds, and when?” The answer determines your cash flow, your collection exposure, and how the transaction is booked.

How a Multi-Lender Waterfall Works

A waterfall is a single credit application that is routed to a sequence of lenders, in a set order, until one approves. The customer fills out one form in your tech’s tablet; the platform sends it to the prime lender first; if the prime lender declines, the same application goes automatically to the next lender down, and so on, with each lender underwriting a slightly weaker credit profile than the one above it. The customer sees one application and one answer. The tech never re-keys anything, never has to say “let me try another company,” and never has to decide which lender to use.

The order is the whole point. A typical waterfall on a platform like Turns or Finturf looks like this:

1. Prime lender (Wells Fargo, GreenSky, Service Finance, GoodLeap, or Financeit — whichever you’re enrolled with) — the 0% promos, approving roughly 55–65% of a residential customer base.
2. Near-prime lender — standard-APR loans for the 660–700 band, low or no dealer fee.
3. Subprime lenders — one or more second-look lenders underwriting down to about 580, at higher customer APRs, usually at no fee to you.
4. Lease-to-own — Acima, Snap, Koalafi, or an in-network equivalent, for the customer nobody above will touch. Approval is near-instant and there is no score floor, but the ticket cap (usually $5,000 or less) means it catches repairs and small installs, not full replacements.

That last step matters more than most owners realize: on Turns and Finturf, lease-to-own is built into the waterfall. You don’t enroll separately with Acima and train techs to pull up a second app; the lease-to-own offer just appears as the last approval in the same flow. It is also the reason the platforms can advertise approval rates in the 90s — the number is the combined result of every tier, not any single lender.

Three things to know when you set one up. First, the sequence is configurable, and the platform’s default may not be yours: you generally want the lender with the best fee for you ranked highest among the lenders that will approve a given customer, not simply “prime first.” Second, each step is a separate credit decision with its own soft pull, and the customer should be told up front that one application may be reviewed by several lenders. Third, the funding path can change between tiers: the prime and second-look lenders pay you on completion, while a lease-to-own provider technically buys the equipment and pays you as the vendor — same net effect, different paperwork and a different line in the lender portal, which your accountant needs to recognize when reconciling deposits.

A waterfall is also the simplest answer to the single most common financing failure we see in client CRMs: a prime decline recorded as “customer not approved” with no second attempt. In a well-built stack, a prime decline is just the first step.

Credit Score Bands: What Approval Actually Depends On

Every lender sets its own cutoffs, and they move with the credit cycle, but the bands below are a reliable map of what you can expect in a residential service customer base.

Three things owners get wrong here. First, a decline at your prime lender is not a decline — it is the start of the waterfall, and if your process stops there you are leaving a third of your approvals on the table. Second, the dealer fee and the customer’s rate move in opposite directions: 0% to the customer is the most expensive product for you; a 24% APR to a subprime customer usually costs you nothing. Third, score bands describe the applicant, not the household; a declined homeowner’s spouse is a second application, and most lenders allow a co-applicant.

Published approval rates tell you how the stack performs as a whole. Turns advertises up to 94% approval across its prime-plus-second-look waterfall in ServiceTitan. A shop with a single prime lender and no second look typically sees 55–65%. That 30-point gap is real revenue.

What 0% Actually Costs: Dealer Fees and the Economics

The dealer fee (also called a merchant fee or discount rate) is what the lender deducts from your funding to pay for the customer’s promotional rate. It is the real cost of financing and it belongs on the P&L as its own line.

Representative fee ranges in 2026:

• Standard-APR loans (customer pays 7–15%): 0–3% dealer fee.
• 0% for 12 months: 4–7%.
• 0% for 18–24 months: 6.5–12%. Wisetack caps its 24-month 0% at 5.5%; manufacturer dealer programs through Synchrony or Service Finance commonly run 9–12% during promo seasons, sometimes subsidized by the manufacturer.
• 0% for 36–60 months or reduced-APR long terms: 12–20%+.
• Second-look lenders (via Turns, Finturf, FinMkt): 0–5%. Lease-to-own: 0%.

A worked example. A $13,000 replacement sold on an 18-month 0% promotion with a 9% dealer fee costs you $1,170. On a job with 42% gross margin, you still clear roughly $4,290 of gross profit after the fee, versus a repair you’d have sold instead or a replacement you wouldn’t have sold at all. On a job priced at 25% gross margin, the same fee eats more than a third of the gross profit. The promotion didn’t change; the job’s margin did. This is why we tell clients the question is never “should we offer 0%” but “which jobs can afford it.”

Three rules that keep financing from quietly eating your margin:

Price the fee into the book. Your price book should assume financing. If your blended dealer fee runs 6% across financed jobs and 40% of replacements are financed, that is roughly 2.4% of replacement revenue; build it into the price. Then cash customers get the same price, and a tech never has a reason to discount a financed job on top of the promotion. Offering a cash discount on top of 0% is paying for financing twice.

Match the product to the ticket. Long 0% terms belong on $10,000+ replacements where the fee is covered by the margin and the monthly payment is what closes the sale. On a $2,500 repair, a 12-month standard-APR plan or lease-to-own at zero fee is the right tool; a 24-month 0% promo at 10% is a gift to the customer that comes out of your margin.

Measure fee as a percentage of financed revenue, monthly. The number most owners have never seen is their blended dealer fee rate. We’ve seen it run from 3% at well-managed shops to 11% at shops where techs default to the longest promo on every job. On $3M of financed replacements, that is the difference between $90,000 and $330,000 a year.

How We Account for It

Our convention for every client: financing fees and payment-processing fees sit on their own line below gross profit, not buried in COGS and not netted out of revenue.

The mechanics: book the job at full invoice value as revenue. When the lender funds, say, $11,830 on a $13,000 job, record $13,000 of revenue, $11,830 of cash, and $1,170 to the financing fee line. Job-level gross margin stays comparable across cash and financed jobs (which is what you need to evaluate pricing and techs), and the cost of financing shows up where an owner and a buyer can both see it and manage it. Credit-card processing fees go on the same line for the same reason.

Two things this convention protects you from. Netting the fee against revenue understates your top line and makes financed jobs look lower-margin than they are, which leads techs and managers to avoid financing — exactly the wrong incentive. Burying it in COGS makes gross margin move with your promo mix instead of your pricing and labor, so a bad quarter of fee discipline looks like a job-costing problem. Below gross profit, on its own line, the number is honest and actionable.

If you take Hearth-style funding where the customer pays you, there is no fee to book on the transaction; the subscription is a selling expense, and the receivable is a customer receivable until it’s paid. That is simpler, but it is also why Hearth money doesn’t behave like financed money in your cash forecast.

Setting Up the Stack

For a residential service company on ServiceTitan or Housecall Pro, the setup that works:

1. A prime lender with a real promo menu — Service Finance, GreenSky, Synchrony, or Wells Fargo, usually through your manufacturer’s dealer program so you get the subsidized seasonal promotions. Wisetack if you want simplicity and native CRM integration and your replacement tickets sit under $25,000.
2. A second-look waterfall behind it — Turns if you’re on ServiceTitan (it sits directly behind Wells Fargo, GoodLeap, GreenSky, Financeit, or Service Finance in the integration and runs automatically on a decline); FinMkt or Finturf otherwise. One application, no re-keying, approval in the home.
3. Lease-to-own as the last catch for sub-$5,000 repairs and installs — built into the Turns or Finturf waterfall, or Acima/Snap directly if your platform doesn’t include it. Presented honestly as a lease.
4. A hard rule that every replacement quote is presented with a monthly payment, not just a total, and that the tech runs the application on the first visit. Financing offered after the customer hesitates is a discount request; financing presented up front is the price.

Then run it by the numbers. The five KPIs that tell you whether financing is working: approval rate across the full stack (target 85%+), financed share of replacement revenue (35–50% for a residential shop), average financed ticket vs. cash ticket (financed should be 20–30% higher), promo mix (what share of financed jobs are on long 0% terms), and blended dealer fee as a percentage of financed revenue (under 6% is well-managed). All five come out of your CRM and your lender portals monthly, and all five belong on the operational dashboard next to booking rate and average ticket.

Platform Comparison: Financing Companies for Contractors

Fees and floors move; confirm current terms with each provider before enrolling.

Frequently Asked Questions About Customer Financing for Contractors

What percentage of HVAC replacements should be financed? For a residential service company, 35–50% of replacement revenue is a healthy range. Below 25% almost always means financing isn’t being presented on every quote.

Is the dealer fee a cost of goods sold? We book it below gross profit on a dedicated financing-and-processing-fee line, so job-level margins stay comparable and the cost is visible and managed. Netting it from revenue or burying it in COGS both distort the numbers that drive pricing decisions.

Should we offer a cash discount? No. Price the blended dealer fee into the book so cash and financed customers pay the same price. A cash discount on top of promotional financing is paying for financing twice.

What’s the difference between Hearth and Turns? Hearth connects your customer to a personal loan that is deposited in the customer’s account; the customer pays you, and you pay Hearth a flat annual fee. Turns runs a second-look waterfall behind your prime lender; the lender pays you directly on completion, minus any dealer fee. One is a lead-to-a-loan; the other is point-of-sale financing.

Does second-look financing cost the contractor more? Usually less. Second-look lenders charge the customer a higher APR, so the dealer fee is often zero to low single digits. The expensive product is the prime 0% promotion.

What credit score do customers need? Prime lenders generally start around 660–720; second-look reaches 580; lease-to-own has no floor. With all three tiers in place, approval across the stack runs 85–94%.

How fast does the contractor get paid? Point-of-sale lenders fund one to three business days after you submit the completion certificate. With a marketplace loan paid to the customer, you get paid when the customer pays you.

Related: HVAC Job Costing · Pricebook Guide for HVAC Contractors · HVAC Profit Margins · ServiceTitan Accounting · Exit Planning

About the Author

Raymond Gong

Raymond Gong is one of the senior partners of Profitability Partners, a fractional CFO and accounting firm built exclusively for home services companies — HVAC, plumbing, electrical, and roofing operators doing $5M–$30M in revenue. Prior to Profitability Partners, Raymond was a private equity professional at Black Diamond Capital Management and Third Lake Partners, a large family investment office. Raymond runs the books, the reporting, the profitability optimization, and the exit prep for contractors nationwide, working daily inside ServiceTitan, Housecall Pro, and QuickBooks — turning messy operational data into financials owners can actually run the business on, and that buyers and lenders take seriously. Raymond is a graduate of Vanderbilt University and is based in Tampa, FL.

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Raymond Gong

Raymond Gong is one of the senior partners of Profitability Partners, a fractional CFO and accounting firm built exclusively for home services companies — HVAC, plumbing, electrical, and roofing operators doing $5M–$30M in revenue. Prior to Profitability Partners, Raymond was a private equity professional at Black Diamond Capital Management and Third Lake Partners, a large family investment office. Raymond runs the books, the reporting, the profitability optimization, and the exit prep for contractors nationwide, working daily inside ServiceTitan, Housecall Pro, and QuickBooks — turning messy operational data into financials owners can actually run the business on, and that buyers and lenders take seriously. Raymond is a graduate of Vanderbilt University and is based in Tampa, FL.