Intro

Financing can be the difference between a signed job and a stalled estimate. But contractors also have a practical concern: if financing comes with a cost, how do you protect your margin and still win the project?

If you’ve heard the term “contractor discount” (sometimes called a dealer discount), it can sound confusing at first. In reality, it’s a common structure in home improvement financing, and when you understand how it works, you can use it strategically - as a tool to close more jobs you would otherwise lose.

What is a contractor discount?

A contractor discount is a risk-based fee that a financing provider may charge the contractor on certain loans. It does not apply to every customer and it is not a “hidden fee” for the homeowner. It is typically assessed when a customer’s risk profile is higher, and the financing provider needs pricing to match that risk.

At Cartera, the contractor discount can show up on some loans depending on the underlying customer risk. Customers with stronger profiles may be approved without a contractor discount. Customers with weaker profiles may require one, which can allow you to close sales that would otherwise not be financeable.

Why this model exists in home improvement financing

Home improvement projects are often large-ticket purchases - HVAC replacement, windows, doors, water heaters, generators, fencing, and more. Many homeowners want the work done, but they don’t have the cash on hand or they don’t fit traditional lending criteria.

Risk-based pricing is one way financing providers keep access open to more homeowners while still managing repayment risk. For contractors, that translates into more “yes” outcomes on jobs that would have turned into “we’ll think about it” or “we’ll wait.”

How to decide whether to absorb it or price for it

There is no one-size-fits-all answer. The right approach depends on your market, your close rate, your average job size, and how competitive your category is. Here are three practical approaches contractors use:

1) Absorb it selectively (deal-saving approach).
If the job is high-value or time-sensitive, contractors sometimes treat the contractor discount as the cost of saving the deal. This is most common when the alternative is losing the entire project.

2) Build it into pricing (portfolio approach).
Some contractors set pricing with a small buffer across jobs, knowing that not every project will require a discount. Over time, the wins and losses balance out, and the contractor avoids renegotiating mid-sale.

3) Offer two prices (cash vs financed).
This is the most transparent approach when done correctly: a cash/check price and a financed price. It reduces confusion and makes it easier for your team to present options confidently. Many homeowners already understand that financing often comes with a cost - what matters is clarity.

Whichever path you choose, the key is consistency. The fastest way to lose trust is to introduce surprise pricing after the homeowner has emotionally committed to the project.

How to talk about it without sounding like a lender

Contractors win when they stay in their lane: project expert and trusted advisor. You don’t need to explain underwriting or get into financial details. You can keep it simple and professional.

Here are a few contractor-friendly lines:

- “We can offer a financing option to help you move forward. Financing is subject to approval and terms vary.”  
- “Some financing options have a cost depending on eligibility. We’ll keep everything clear before you commit.”  
- “If the first option doesn’t work, we can try another path.”

Notice what these lines do: they set expectations early without overwhelming the customer. That’s how you protect both conversion and reputation.

Where Cartera fits (and why contractors use it alongside other options)

Many contractors already work with a financing company. The problem is that one financing partner rarely fits every homeowner profile. That’s why contractors often keep a second option available - especially for customers who are declined elsewhere, don’t have a social security number, or have limited credit history.

Cartera is designed around contractor pain points: the ability to submit applications quickly through an online portal from anywhere, and a process built to keep projects moving. After approval and once the required loan documents are uploaded and verification is completed, contractors can expect funding the following business day (subject to approval and completion requirements).

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Common mistakes to avoid

A few avoidable mistakes can create friction and reduce close rates:

- Waiting too long to introduce financing.If you only mention financing after the homeowner hesitates, it feels like a salvage move. Mention options early.  
- Overpromising approval. Financing is subject to approval. Keep your language confident but accurate.  
- Changing the project scope to “make it financeable.” This can backfire. Keep the scope tied to the homeowner’s needs and present financing as a way to make the right project possible.  
- Treating financing like paperwork. For the homeowner, financing is emotional. It’s about affordability and trust. Your team’s tone matters.

Conclusion

Financing is not just a payment method - it’s a sales lever. A contractor discount, when it applies, is best understood as a risk-based cost that can unlock approvals you would not otherwise get. Used thoughtfully, it helps you protect your pipeline, increase your close rate, and keep crews booked.

If you want to see how Cartera works for contractors - including how quickly applications can be submitted and how the funding process works after approval - learn more on Cartera’s contractor page or request a quick call. Financing is subject to approval, and eligibility, rates, and terms vary.