Getting Your Customers Off the Fence!

Transcription

1 PENNSYLVANIA S HOME ENERGY LOAN PROGRAM Getting Your Customers Off the Fence! Drive your sales of energy efficiency improvements with fixed monthly payment financing Become a Keystone HELP Participating Contractor

2 Getting Your Customers Off the Fence! How and why monthly payment financing closes more sales Different types of financing options / Pros and Cons How successful contractors integrate financing into marketing and sales

3 The Facts About Financing In the current Perfect Storm of energy-cost concerns and tougher credit regulations on lenders, consumers more than ever need simple financing options to make energy improvements 70% of all Home Improvements up to $15,000 are financed in one way or another, 90% of improvements greater than $15,000 are financed Most consumers are motivated by necessity when it comes to energy efficiency (the Reactive consumer who needs to replace a broken furnace) this is 90% of the energy efficiency market and can t be ignored Proactive improvements are growing, but contractor most grow faster to support this market Energy-efficiency improvements are most often sold, not bought Keep it simple for contractor and consumer the goal is work performed and energy savings, not the number of audits conducted or proposals written

4 The Numbers Do Not Add Up $3,000 - $7,000 The amount of disposable cash available to the average American Homeowner $8,200 The amount of current debt owed by the same average American Homeowner $?,??? What is the average price for your installations?

5 The Result Sticker Shock and Staying On the Fence Most homeowners purchase 1-2 HVAC or whole house improvement systems in their lifetime usually after current system or improvements fail 3 rd or 4 th largest purchase a homeowner will ever make Home Vehicle College Home Improvement

6 Can We Afford It? The #1 Issue for Consumers Considering Home Energy and other Major Upgrades

7 Reactive Customers - Welcome to the Twilight Zone HVAC Typical home improvement installations ($1,000 to $25,000) fall into the consumer s financing twilight zone - too big for a credit card, too small for a home equity loan Customer doesn t want a lien on their home Time sensitive consumer needs work done ASAP Contractor-driven Promotional ( Teaser Rate or Same as Cash ) financing is a great option for buyers with readily available cash, but does not address buyers who are looking for longer term affordability for a major capital purchase Borrower wants longer term or lower rate than they can get from bank

8 PROACTIVE Consumer - The Thinker More project driven, less time sensitive Bigger project costs More customer thought, engagement and foresight Loans above $15,000 typically involve home equity financing which may be difficult in today s economy with limited home equity and bank regulatory restrictions

9 Monthly Payment Affordability is often the KEY for both REACTIVE and PROACTIVE Consumers Customers may have an interest in more efficient systems or improvements but may be put off by higher price. Average American current available cash is $3,000 to $7,000..What is your average installation cost? If a contractor s closing ratio is 40%, what s happening to the other 60% - why aren t they buying? Is it the Contractor s reputation? Is it the Price? In today s economy are they scared of gimmick financing? Or is it simply that they are not being given an affordable monthly payment option that comfortably fits their budget and can be offset by energy savings?

10 How are Most Large Capital Purchases Marketed and Paid for Today?

11 Monthly Payment Financing vs. Promotional Financing Promotional Financing (Same as Cash, 0% for a limited time etc) may be a great sales tool for someone who already has the cash or for a smaller ticket item. Are you selling $1,000 big screen TVs? Or something a little more expensive? How is your Cell Phone sold to you? If you didn t have $8,000 today how are you going to get it in 6 months to avoid 18 to 32% interest rates? Scary proposition for most consumers Fixed Monthly Payment options allow you to bundle services and present Good/Better/Best Monthly Payment Options and show the offset with energy savings

12 So What are the Financing Options for $8,000? Real Estate Secured Options Type Source Terms Pros Cons Second Mortgage / Home Equity Line of Credit (HELOC) Banks Credit Unions Mortgage Companies Typically adjustable for lines of credit Fixed rates for second mortgages Easy acces s if you already have an established HELOC Typically lower rate than unsecured Tax-deductible Unless you already have a HELOC, closing costs and time to set up could take days or weeks Typically involves a bank visit and closing You need to have home equity! (PowerSaver goes to 100% LTV) First Mortgage Banks Credit Unions Mortgage Companies Typically fixed rate and longest term Typically lowest rate Great if you want to rollin energy efficiency improvements on a refi or new home purchase Special provisions for PowerSaver Tax-deductible Not for fast or time sensitive improvements Closing costs, title insurance etc etc - could take weeks Typically involves a bank visit and closing Loan to value limitations (except for PowerSaver)

13 So What are the Financing Options for $8,000? Unsecured Options Type Source Terms Pros Cons Credit Cards Borrower Variable rate and payment No real work for contractor just swipe! Most consumers don t have enough available credit Monthly payment can be high $200 on a $8,000 job (2.5%) Fees to contractor Promotional Financing (0%, Same as Cash etc) Manufacturers Programs Finance Companies Variable rate and payment which can escalate to high interest rates after the promotional period. Often instant approval Typically limited paperwork Great to get buyers with cash off the fence Possible bait and switch reputational risk for contractor High fees for contractor unless subsidized by manufacturer

14 So What are the Financing Options for $8,000? Unsecured Options Type Source Terms Pros Cons Straight Financing Manufacturers Programs Home Center programs Finance Companies An apparent fixed rate and payment but can move to variable rate and payment subject to the terms of the agreement Often instant approval Typically limited paperwork Risked Based Pricing with different rates for different credit profiles can result in more approvals Contractor need to be fully involved in credit process Not really fixed rate or payment - can potentially change with delinquency, market changes or other factors Potentially high fees to contractor unless subsidized by manufacturer Risked Based Pricing with different rates for different credit profiles can result in potential customer dissatisfaction and difficulty in quoting monthly payment Standard Bank/Credit Union Installment Financing Banks Credit Unions Fixed rate and term for life of loan Typically shorter term Typically fair market based interest rate may be risked based No fees to contractor Lender typically handles all paperwork no contractor integration May not be as fast Typically involves a bank visit and closing Energy Efficiency Installment Financing Energy Efficiency Lenders Program Partners Fixed rate and term for life of loan Typically longer term means lower monthly payment Typically one size fits all fair market based interest rate or below market Low or no fee to contractor Marketing credibility for contractor ( utility program etc) Contractor integrated into lending process but not for contractor who wants to control credit process

15 Don t Make Judgments or Assumptions! Which Home Would You Offer Financing To?

16 Don t Make Judgments or Assumptions! Offer All Your Financing Options on All Your Proposals Remove the greatest sales obstacle by showing to a customer that money is not an issue Credit Cards if they want to get their points Promotional programs to get true cash buyer off the fence Any special subsidized financing you have available A true fixed rate and payment option for the monthly payment buyer (not something that potentially has a variable payment or interest rate that s bait and switch!) Always put the monthly payment option next to the cash price you ll be amazed how that simple act will convert more sales.

17 One of the Nation s Top Home Energy Loan Programs Over 14,000 ($110 Million) in energy efficiency loans since 2006 Over 2,000 Pennsylvania contractors have participated in the program since its inception Created by AFC First (now part of Renew Financial) and West Penn Sustainable Energy Fund in 2005 Taken statewide by a $20 million investment by Pennsylvania Treasury in 2006 and became the foundation for the national Warehouse for Energy Efficiency Lending Program support has been provided by DEP, PHFA, Pennvest, utilities, sustainable energy funds and philanthropies Awarded 2013 Alliance to Save Energy Andromeda Star of Energy Efficiency Award Semi Finalist Innovations in American Government award from the Ash Center at the Harvard Kennedy School US DOE first non-utility Home Performance with ENERGY STAR named sponsor

18 Dedicated, Experienced Energy Efficiency Lenders AFC First Financial Corporation, a national energy efficiency lender founded in 1947, working with over 5,000 contractors nationwide is now part of Renew Financial, the country's most innovative energy efficiency lender. This partnership will expand clean energy and energy efficiency financing options across the United States. Stay tuned for more exciting news!

19 Low, Fixed Rate, Fixed Monthly Payment Financing to Help Pennsylvania Contractors Drive Sales of Energy Efficiency Home Improvements Supported by the PA Treasury, PennVest and PA DEP Administered by Renew Financial (successor to AFC First), the country s most innovative energy efficiency lender A wide array of qualifying improvements Only for work performed by Participating Contractors

20 What is KeystoneHELP? Financing ranging from $2,500 to $20,000 Energy Assessment not required All income levels are eligible Instant Approval and Fast Funding Repayment Terms Up to Ten Years Unsecured - No Penalty for Pre-Payment 7.99% APR True Fixed Rate for All Qualifying Customers (4.99% with zero contractor fee for approximately the first 1,000 program loans) No points, fees or closing costs No home equity required and new homeowners are OK too Low Cost to Contractor (2%) Enhanced Contractor Sales Training, Support and Tools

21 What Improvements Qualify? Heating, Ventilation and Air Conditioning Boilers Furnaces Wood and Pellet Stoves Water Heaters Air Sealing & Insulation Windows & Doors Energy Efficiency Lighting Energy Efficiency Appliances And More Eligible improvements must meet ENERGY STAR standards or meet other performance eligibility criteria (if applicable). 25% of the loan may be used for non-qualifying, project related improvements. Energy Assessment not required but may be included in loan

22 What Improvements Qualify?

23 What Improvements Qualify?

24 What Improvements Qualify?

25 What Improvements Qualify?

26 Who is Eligible? Pennsylvania homeowners who are making qualifying improvements to their 1- or 2-unit primary residence (owner occupied) Good credit and the ability to repay are required All income levels are eligible

27 Who May Perform the Work? Only KeystoneHELP-Participating Contractors may perform the work Previously participating AFC First KeystoneHELP Contractors will be among the first to utilize this new program Basic Contractor Qualifications: Minimum 3 Years in Business and history of financial stability Satisfactory company and personal credit histories (when applicable) and satisfactory BBB rating Required licenses and insurance Overall reputation for a high level of service and workmanship Enroll at keystonehelp.com

28 Can We Afford It? : The #1 Issue for Consumers Customers may have an interest in more efficient systems and improvements but may be put off by higher price Average American current available cash is $3,000 to $7,000 (What is your average installation cost?) If a contractor s closing ratio is 40%, what s happening to the other 60% - why aren t they buying? Is it the Contractor s reputation? Is it the price? In today s economy, are they scared of gimmick financing? Or is it simply that they need an affordable monthly payment option that comfortably fits their budget and can be offset by energy savings?

29 True Fixed Rate Financing

30 Providing Affordable Monthly Payment Financing Typical Promotional Credit Plan KeystoneHELP Loan 18 to 32% 7.99% $2,500 $63 $30 $5,000 $125 $61 $7,500 $188 $91 $10,000 $250 $121 $12,500 $313 $152 $15,000 $375 $182 $17,500 $438 $212 $20,000 $500 $243

31 KeystoneHELP EASIER Process Fast and Easy Approval and Funding E A S I E R ELIGIBILITY 4 P s APPLY online or by phone SIGN and return finance docs & original Truth In Lending disclosure INSTALL project; Sign Completion Certificate E-PAYMENT to contractor via ACH REPAYMENT monthly to Renew Financial

32 New State of the Art Technology for Fast and Easy Approvals and Project Funding Instant In-Home Approval E-Loan Documents No Paper! Mobile Contractor Sales Tool to Quote Low Payment Options Easy Contractor Portal to Track Job Status Contractor Sales Tool, Training and More!

33 Friendly, Efficient Call Center Support Call Center Hours 7 days a week Monday Friday 8am-9pm Saturday 9am 6pm Sunday 12pm 5pm You can talk to a live energy lending specialist Instant approval over the phone They are here to help you resolve any questions you may have

34

35

36 Sign Financing Documents Homeowner receives financial documents via Docusign Owner signs financial documents via Docusign We give homeowner s a 5 calendar day Right of Rescission before funding

37 Contact us for updates and more information For program questions or contractor training Randy Bak; Regional Sales Manager Philadelphia, Southeastern PA (978) Sean Spielvogle; Regional Sales Manger Pittsburgh, Western PA (412) Dan Melamedorf, Account Manager (610) Phil Davanzo, Account Manager (610) Trey Muffet; Eastern Regional Sales Director (415) Tessa Shin; Director, Unsecured Programs (610) Todd Fach, Sales Training Manager (610) For contractor approval questions or status Valerie Berdahl; Senior Contractor Specialist (610) Reggie Selby; Contractor Specialist (610) For channel partnerships (manufacturer, distributor, trade or community organization) Peter Krajsa; Executive Vice President (610) Greg Burns; Director, Channel Development (207) Susan Moring; Channel Marketing Manager (610)