Contractor offer financing - should I bother going for it?

[Aleksey Vinogradov]

Hi everyone,

an HVAC contractor offers financing for a 15K project for 24 months at 0%

Does it look like a good move? What is the down side? Contractor's lien or something else?

Thanks in advance

[Jared Benson]

The upside for contractor is:

1. that when you don't pay it off in 24 months they can back charge interest for the full amount.

2. They have an account with a third party financing company that will pay them(the contractor) the full amount(minus a financing fee) and then the third party will collect the back charged interest when the full amount is not paid during the agreed term

Both of these situations only benefit them if you don't actually pay everything off in 24 months. I don't know their exact terms but this is generally how "zero percent" financing works. Many people don't pay off the FULL amount by the end of the term and end up paying 15%+ when it is all said and done.

If they offer financing it means 1 of 3 things generally.

1. They have amazing margins and will cover the cost in the first few payments
2. They are large enough to eat the cost to add a benefit for their customers
3. They are large enough to have an account with a financing company

Hope this helps!