payments
Offering Financing Without Becoming a Lender
Point-of-sale financing changes what you may say about price. Truth in Lending attaches to the advertisement, not only to the paperwork at signing.
Offering a monthly payment alongside a price raises close rates on large residential jobs. It also moves the conversation into a regulated area, and the regulation attaches earlier than most contractors expect: not at signing, but at the moment a number is advertised.
What the rules are
The Truth in Lending Act, 15 U.S.C. 1601, is implemented by Regulation Z at 12 CFR part 1026. Its purpose is stated in the statute: meaningful disclosure of credit terms so a consumer can compare them.
The piece that reaches a contractor who is not a lender is the advertising provision. Reg Z sets rules for how consumer credit may be advertised, and the mechanism is a trigger: state certain specific terms, and you must also state others.
The triggering terms are things like the amount of the down payment, the number of payments, the period of repayment, and the amount of any payment. State one of those in an advertisement and additional disclosures become required, typically including the annual percentage rate.
This is why "$149 a month" on a flyer, a van or a quote is not a free sentence. It is a triggering term, and it brings obligations with it.
The sentence to be careful with
The practical version for a field business.
Safe, generally. "Financing available." "Ask about payment plans." These do not state a payment amount, a term or a rate.
Triggering. "From $149 a month." "No payments for 12 months." "Only 10% down." Each of those states a specific credit term and brings the additional disclosure requirement with it.
The mistake is almost never made in the signed paperwork, which the lender usually controls and gets right. It is made in the marketing: on the website, in the ad, on the truck, and in the quote template, all of which are advertisements and all of which are typically written without reference to any of this.
The CFPB maintains Regulation Z and its official interpretations, and the commentary is the readable part.
Where the money actually comes from
Most contractors do not lend. They introduce the customer to a lender, and the structure of that introduction decides a great deal.
Third-party lender, direct application. The customer applies to the lender, the lender discloses, the lender decides. The contractor's exposure is mostly in what they said before the application started.
Dealer or merchant programme. The contractor is enrolled with a finance provider and presents its products. More involvement, more responsibility, and usually a merchant fee deducted from the funded amount, which is a real cost and belongs in your pricing rather than being discovered at funding.
Contractor-held paper. The contractor extends credit itself and the customer pays in instalments. This is being a creditor, and Reg Z applies in full to the transaction rather than only to the advertising. Do not arrive here by accident, which is possible: an informal arrangement to let a customer pay over several months can meet the definition depending on the circumstances.
The disclosure of the fee you are paying
When a finance programme costs you a percentage of the funded amount, there is a temptation to quote a higher price for financed work and a lower one for cash.
That is a pricing decision with a presentation problem attached. Done transparently, with the cash price posted and the financed price stated as higher, it is honest. Done quietly, where the customer learns the price depended on how they paid only after choosing, it produces exactly the complaint you would expect.
The same logic as card surcharging applies: disclose before the choice, not after it.
What the customer should have before they sign
Independently of what is required, three things prevent most of the complaints in this area.
The total of payments, not only the monthly. A customer looking at $149 a month should see what the job costs in total under that plan, next to the cash price. Any presentation that shows only the monthly figure is relying on the customer not multiplying.
What happens at the end of a promotional period. Deferred-interest products behave very differently from zero-interest ones, and the difference appears months later as a lump of accrued interest. If the product has that shape, the customer should hear it from you before signing, in one sentence, rather than from the lender's statement in month thirteen.
Who they pay, and who to call. After funding, the customer owes the lender and not you. Saying so at signing prevents the call six months later where a customer with a billing question is asking the contractor about an account the contractor cannot see.
The one-line rule
If a number describing a payment appears anywhere a customer can see it, somebody has to have checked it against Reg Z.
That includes the website, the quote template, the proposal PDF, the social post and the truck. Most contractors check the paperwork and none of those, which is backwards: the paperwork is the part a lender already reviewed.