Anyone finance systems?

Discussion in 'Irrigation' started by RandalatA1Sprinklers, Feb 6, 2009.

  1. RandalatA1Sprinklers

    RandalatA1Sprinklers LawnSite Member
    Posts: 83

    I am in the process of setting up to finance new systems. I get about 35% down, payments of around $100 to $150 a month. My security is a mortgage against the property. If I am a first or second mortgage I get 12%. If I am a third mortgage I get 15% cuz the risk is higher. This should start generating income and increase sales. My plan is to make lawn sprinklers affordable for everyone, and build myself a nice income at the same time. Customers can even finance the annual maintenance agreement for the term of the loan. Anybody ever do anything like this? Any ideas or input?
     
  2. Stuttering Stan

    Stuttering Stan LawnSite Bronze Member
    Posts: 1,503

    In the past, I have financed customers through JDL Finance. Haven't had any problems with them. It's been almost a year since I have done anything with them.
     
  3. RandalatA1Sprinklers

    RandalatA1Sprinklers LawnSite Member
    Posts: 83

    Did financing help your sales?
     
  4. Sounds doable. You are thinking. I'd still turn it over to the financing pros and just get my money. Why finance with you at 12% when they can probably get better else where. What if someone holds back payments claiming issues with service or the system? Looks like it has lawsuit potential as well. Check into JDL Financing.
     
  5. EagleLandscape

    EagleLandscape LawnSite Platinum Member
    Male, from Garland, Texas
    Posts: 4,347

    My thought is if someone can't afford a few thousand dollar sprinkler system, they shouldn't need one. In this economy, something like that would scare me if I was the one carrying the note. I would like JDL, or GE finance or something carry that risk.

    Would you be doing credit checks, income verification, reference checks? I would think all of those would be necessary to determine if the customer is "bankable". And then by the time you have investigated what you need to, it might take 5-10 hours. About the time needed to supervise another installation...

    It could increase your sales, but might kill your profits where it wouldnt be worth it. Extra time + high risk?
     
  6. DanaMac

    DanaMac LawnSite Fanatic
    Posts: 13,156

    Why not just accept credit cards? Just increase your rates a little to cover the CC expenses you will incur. I know you're not earning any finance charges, but at least you get your money now, and don't have to worry about them defaulting on your financing.
     
  7. EagleLandscape

    EagleLandscape LawnSite Platinum Member
    Male, from Garland, Texas
    Posts: 4,347

    Great idea. Most ppl that have a rate over 12/15% on a credit card tells me I wouldn't seller finance anything. My highest rates on purchases right now are like 6.9%. I'd rather do a lower rate credit card to buy a system, than to do a contractors in house deal for 12%.
     
  8. DanaMac

    DanaMac LawnSite Fanatic
    Posts: 13,156

    Right now my home equity line of credit is at 5 1/8%, which is less than my fixed mortgage rate of 5 5/8%. Easily pay for it with the HELOC.
     
  9. DanaMac

    DanaMac LawnSite Fanatic
    Posts: 13,156

    Speaking of credit card accepting, who here is now doing it? I have held off as long as I can. But I think I will set up a Pay Pay account which has lower fees and percentages than a regular merchant account. I'm not going to advertise it, or even make it available to everyone. Mainly for those that are late on paying. I have one right now that my neighbor/lawyer is going to now handle. $275 from last May.
     
  10. AI Inc

    AI Inc LawnSite Fanatic
    Posts: 25,311

    I financed 2 the yr before last and 1 last yr.
    1st one was a small city lot , front yard only $1300 , $300 down , pay the rest before the end of the winter , was a cop here in town , was payed before the end of winter.
    2nd was $4400 , $1000 down , $400 a month till payed. Payed on time in full and gave me 2 referalls that payed cash on same street each new job sold for $5k +
    3rd $5600, for a DEA agent , next town over . $1000 down , $600 every 2 weeks till payed.
     

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