When contractors explore financing options for their customers, they often encounter the term “dealer fee”—a charge imposed by many lenders when offering financing. But what exactly is a dealer fee, and how does it impact your business and your bottom line?
In this installment of our Financing Fundamentals series, we’ll break down what dealer fees are, why most lenders charge them, and how you can offer financing without dealer fees through the Hearth platform.
Ready to learn more about Hearth’s financing options? Schedule a free demo today!
How Do Dealer Fees Work?
A dealer fee is a percentage-based charge that a lender applies when a contractor or business offers financing to customers. This fee is typically deducted from the total loan amount before funds are disbursed to the contractor. Dealer fees help lenders cover the administrative costs and risks associated with offering financing.
Think of these fees as a cost of doing business with certain lenders. When a contractor offers financing to their customers, they are essentially acting as a bridge between the customer and the financing provider. The dealer fee is the price the lender charges for facilitating the loan.
Here’s a simplified breakdown of how dealer fees function in a financing transaction:
- A customer applies for financing: They choose a loan option to spread out payments over time.
- The contractor receives payment from the lender: The lender approves the financing and disburses funds to the contractor.
- The lender deducts the dealer fee: Before the funds are released, the dealer fee is subtracted from the total amount.
Let’s say you sell a $10,000 project and offer financing through a lender that charges a 5% dealer fee. The lender approves the financing and pays you:
- Project Cost: $10,000
- Dealer Fee (5%): -$500
- Amount You Receive: $9,500
The customer, however, still finances the full $10,000 and repays the loan in monthly installments based on their loan terms.
Why Do Some Lenders Charge Dealer Fees?
Lenders assume risk when offering financing to customers, and dealer fees help cover:
- Loan Processing & Administration Costs: Credit checks, paperwork, and loan servicing expenses.
- Risk Management: Protecting against potential defaults or late payments.
- Providing Competitive Interest Rates: Some lenders offset lower interest rates by charging dealer fees instead.
While dealer fees are a common practice in contractor financing, they’re not a requirement. That’s where our platform changes the game.
How You Can Offer Financing Without Dealer Fees
Traditionally, offering financing meant contractors had to sacrifice a portion of their revenue due to dealer fees. However, that’s no longer the case. With our platform, you can provide hassle-free financing to your customers without dealer fees, allowing you to receive the full project amount without deductions.
By eliminating dealer fees with Hearth financing, we’re ensuring that contractors keep more of their hard-earned money while still benefiting from the ability to close high-ticket deals, attract more customers, and improve cash flow.
✅ Keep 100% of Your Project Revenue
Unlike traditional lenders that take a cut of your earnings, our platform ensures that you get paid the full project amount—no hidden fees, no deductions. This means that if you sell a $10,000 project, you receive the full $10,000, giving you complete financial control.
✅ Increase Sales & Close More High-Ticket Deals
Financing is a powerful tool for breaking down price objections and making your services more accessible to customers. With Hearth, you can confidently offer financing to more customers—helping you win bigger projects that might otherwise be out of reach for homeowners.
✅ Enhance Your Cash Flow
Cash flow is critical for any contracting business. With our financing solution, you receive full payment upfront while your customers make manageable monthly payments. This eliminates long waits for large lump-sum payments and ensures that your business stays financially strong.
✅ Offer Competitive Financing Without Hidden Costs
Many contractors hesitate to offer financing because of dealer fees, fearing they’ll have to increase prices to compensate for the loss. With our platform, there’s no need to adjust your pricing structure—you can offer financing with no extra costs to you, making your services more attractive to homeowners.
✅ Stay Competitive & Build Customer Trust
While other contractors might pass dealer fees onto their customers (raising project costs), you can promote transparent pricing and financing without added fees. This gives you a clear competitive edge and instills confidence in your customers, who appreciate simple, straightforward payment options.
✅ Simplify Your Business Operations
With no dealer fees to account for, you don’t have to worry about adjusting invoices, factoring in deductions, or managing complex pricing strategies. Our financing solution is designed to integrate seamlessly into your sales process—so you can focus on delivering high-quality work without financial complications.
Why More Contractors Are Choosing Our Financing Solution
In an industry where contractor financing often comes with hidden costs, complicated pricing structures, and dealer fees that cut into profits, contractors are turning to our platform as the smarter alternative. With no dealer fees, fast payments, and an easy-to-use system, our financing solution is built to help contractors win more jobs, boost revenue, and improve cash flow, all without extra costs.
Contractors choose us because we remove the financial barriers that come with traditional financing. We’re here to help you sell more, earn more, and provide a better experience for your customers—without sacrificing your hard-earned revenue.
🚀 More profit. More sales. No dealer fees.
How to Get Started With Hearth
Ready to offer financing without dealer fees? Our platform makes it easy for contractors to provide flexible payment options while keeping their full earnings.
Contact the Hearth team today to learn more and start offering financing the smart way!
