0% for 24 months sounds great – what does it cost you?

Those glossy “0% for 24 months” flyers hide a nasty secret. The bank providing that promotional financing charges the contractor a dealer fee, sometimes between 5% and more than 20% of the job cost. To cover that, many contractors inflate the regular price and then offer a “cash discount,” making consumers think they’re saving money.

Before you sign up with a financing partner, ask for the dealer fee schedule and bake it into your pricing. If the fee is 15%, you need to raise your price by at least that much or accept lower profits. Also be aware of deferred interest: some “0%” plans accrue interest from day one and back-charge it if the customer misses a payment.

If you’re not transparent, you’ll find yourself on the wrong side of a Truth in Lending Act complaint. A simple solution? Show two prices—true cash price and financed price—and let the homeowner decide.