Financing: Collateral, Lender Fees... Let's Talk About It

This week let's take the time to look into the various financing that is available to home owners for their home improvement project.   With financing there is a multitude of offerings for you as a professional roofing contractor and home improvement professional to offer your clients.  The financing is broken into a pair of sectors based on collateral.  

1. Secured Loans - This is a loan that will have a lien against the property or another asset.   These loans generally take longer as they have more stipulations with income, collateral, etc. yet tend to have attractive rates and little fees from the lender
2. Un-Secured Loans - This is a loan that is based solely on the credit of the property owner and will have no liens on their property or assets.   These loans typically have attractive interest rates as well based on credit worthiness but will likely be accompanied by a lender fee.

So if there is a fee associated with financing what do we do with these?   Do we even know how they calculate these fees?   Many of the contractors that we consult and work with have differing pricing mechanisms and how they calculate their sales prices.   Depending what method you use will make a difference to the ease of calculating the lender fees.   Price calculation methodology:

1. Mark Up - Simply taking costs and multiply by a percentage to be added to the costs.   
2. Margin - Taking costs and dividing by a factor.   This leaves a percentage of the project as cost and a percentage as profit

How are lender fees calculated?   They are most certainly developed from the total sales prices so the margin calculation method is needed.   You would add the margin and lender fees to find the proper percentage that would use in the division problem.   There is a lot of math that has to be considered in order to ensure you are properly calculating sales prices and payments when financing.   If you have more questions about any of this please reach out to us at support@hirevpro.com and we will help you.   Our platform automatically accounts for lender fees and company defined margins or mark-up to ensure the most accurate and easy to present sales platform.   To receive a 7 day free trial and get more answers than questions sign up at http://hirev.pro/register

Until Next Time!

Brad Corbin

Sales, Simplified