Home improvement financing for contractors: a lender program or your own payment plan

Checked against the Code of Federal Regulations, the CFPB, the New Jersey and Florida regulators, Stripe's pricing and documentation, and the lenders' own pages on 22 October 2026. General information, not legal advice.

How do contractor financing programs work?

Contractor financing programs generally work like this. The contractor offers the financing, and a lender makes the loan.

One $14,800 job, two routesYour own plan$1,500 + 12Program fee, illustrative 10%$1,480.00Own plan, all by card$433.08Own plan, all by bank$65.00Stripe standard US pricing · lender fees vary by program, some charge none

• The homeowner applies, and the lender decides. Wisetack says payment options through it "are provided by our lending partners" and are "subject to credit approval", with terms that "range from 3 - 120 months". (Wisetack)
• The lender pays the contractor. Hearth tells contractors "Once the job's done, you get paid directly", and that the loan is "one your customer takes out". (Hearth) Sunlight Financial advertises "funding in as little as 24 hours" and adds that "Funding timelines may vary based on completion of verifications and bank processing times". (Sunlight Financial)
• The homeowner repays the lender, on the lender's terms and rates. The customer relationship for that debt sits with the lender, not with you.

The appeal is plain. You're paid for the job when it's funded, and someone else carries the risk that a homeowner stops paying.

What is a dealer fee?

A dealer fee is what some programs charge for the financing, and it doesn't always show. In its August 2024 report on solar financing, the CFPB said lenders "frequently bake these fees (commonly referred to within the industry as "dealer fees") into the loan principal". It found hidden fees typically ran from 10 to 30 percent of the cash price, and could exceed 50 percent. In its example, a $30,000 cash price carries a $9,000 fee, so the loan principal is $39,000, and the lender sends the installer $30,000 and keeps the rest. (CFPB issue spotlight: solar financing)

That report covers solar lending, not every trade. Programs differ. Hearth, for one, says there's "no cost to you to offer it" and that contractors don't "pay per-loan dealer fees". Wisetack publishes a "flat 3.9% per transaction fee" on its home-services page (Wisetack). Read your own program's agreement and rate sheet: whether the fee comes out of your payment, goes into the homeowner's loan, or doesn't exist is the number that decides the comparison.

What does an in-house payment plan look like?

There's no lender. You and the homeowner agree the schedule, and the homeowner pays you.

Take a $14,800 HVAC replacement with a $1,500 deposit. The $13,300 balance can be:

• twelve monthly payments of about $1,108 (eleven of $1,108.33 and a last one of $1,108.37, which absorbs the rounding), or
• twenty-six payments every two weeks (twenty-five of $511.53 and a last one of $511.75).

Same total, no interest, and no credit check unless you choose to run one. You decide who gets a plan. A bigger deposit on a bigger job is one way to limit the risk without turning anyone away.

The trade-off is the one that matters. You're paid as the homeowner pays, over the year, not up front. And when a payment doesn't arrive, it's yours to follow up.

What does each route cost on one job?

Here's the $14,800 job both ways. The lender figure is an illustration, not a quote: 10% is the low end of the range the CFPB saw in solar lending, and your program may charge more, less or nothing.

The card figures use Stripe's standard US pricing: 2.9% + 30¢ per domestic card payment, and 0.8% capped at $5.00 for an ACH Direct Debit. (Stripe pricing) Over thirteen payments, that's $433.08 if every payment is by card and $65.00 if every one is by bank transfer.

The waiting cost is the same arithmetic as a 0% plan or a lender loan. Across the year, a little over $7,000 is still to collect on average, and at an 8% cost of money that's about $575. Use your own cost of capital, plan length and payment history to run it for your business.

How do you handle card fees on plan payments?

A plan multiplies card fees, because every payment is a card transaction. On the job above, each $1,108.33 card payment costs $32.44 at Stripe's standard rate. Two common answers:

• Offer bank transfer beside card. The fee on each payment above drops to the $5 cap. What does ACH save on a $15,000 plan? runs the numbers payment by payment.
• Add a card surcharge where your state allows it. Stripe's surcharging documentation lists the US as credit cards only, up to 3%. It requires the surcharge to be disclosed before purchase and shown separately on the receipt, and the customer must be able to choose a different payment method. It leaves state rules to you. (Stripe: collect surcharges) A 2.9% surcharge on a $1,108.33 payment is $32.14.

Put the fee in the terms the homeowner agrees to before the first payment, not after.

Does running your own plan make you a lender?

It can. Under Regulation Z, credit is "the right to defer payment of debt or to incur debt and defer its payment", so a plan is credit. Whether you're a creditor depends on its terms and how often you offer it.

A creditor is a business that regularly extends consumer credit that is subject to a finance charge, or "payable by written agreement in more than four installments (not including a down payment)". Regularly means more than 25 times in the preceding calendar year, or more than 5 for transactions secured by a dwelling. (12 CFR 1026.2(a)(17))

So an in-house plan with no interest and four or fewer payments after the deposit generally stays outside that test. The twelve-payment plan above, offered to dozens of homeowners a year, doesn't. In-house financing sets out the test, and is a 0% payment plan a loan? has the questions to take to your attorney.

Two things are particular to home improvement work:

• A lien on the home changes the rules. Where a credit transaction takes a security interest in the homeowner's principal dwelling, Regulation Z gives the homeowner a right to rescind "until midnight of the third business day following consummation". (12 CFR 1026.23) The creditor test also drops to more than 5 a year. Don't secure a plan on the home without counsel.
• States license financed home improvement contracts. New Jersey requires a license for home repair contractors who execute financed home repair contracts. It says a contractor who "deals strictly in cash installment payments over a period of 90 days or less or accepts credit card payments" doesn't need that license, and that every home repair contractor must still contact its Division of Consumer Affairs about registration. (NJ Department of Banking and Insurance) Florida licenses businesses financing home improvements secured by a mortgage or lien, may require a separate license for contracts with no mortgage, and applies it to businesses entering two or more home improvement contracts of $500 or more in a calendar year. (Florida Office of Financial Regulation)

Those are two states, not a survey. Check your own state's banking or financial regulator, and talk to counsel before you launch a plan or lengthen one.

What should you set up before the first plan?

• A written agreement. The price, the deposit, the schedule, any card fee and what happens on a missed payment, signed by the homeowner.
• The deposit. A flat amount or a percentage, taken when the homeowner signs.
• The schedule. Weekly, every two weeks or monthly, a number of payments or a final date, and which payment absorbs the rounding.
• Autopay, with permission. Save the homeowner's card or bank account at signing. For a consumer's bank account, recurring transfers have to be authorized in a signed or similarly authenticated writing, and the homeowner gets a copy. If a payment will differ from the last one, they get written notice of the amount and date at least 10 days ahead. (12 CFR 1005.10)
• The missed-payment plan. A reminder before each due date. Someone on your team told the day a payment fails. Another way to pay, such as a bank transfer. And a rule for who can move a date, split a payment or recalculate the rest, which changing a payment plan after it starts covers.
• Which branch gets paid. If you run more than one branch, each payment should land in that branch's bank account and books.

The two routes aren't exclusive. A lender suits the homeowner who wants a long term and qualifies. Your own plan suits the job you'd rather keep, the homeowner a lender turns down, and the short schedule a loan is too heavy for.

Changelog

• 22 October 2026: first published.