Clients often get sticker shock at the costs associated with remodeling their homes and don’t have the funds to complete the job.
“People get the idea to remodel before they think about what things might cost,” says Joe Levitch, CR, UDCP, owner of Levco Builders in Boise, Idaho. “They oftentimes are startled by the cost to do a remodeling project, and that’s where [the potential job] dies on the line.”
Once, one of Levitch’s clients filled out a loan application at a big box competitor, which gave them on-the-spot pricing and financing for a remodeling job. That client went back to Levitch, who informed them he could match what the big box competitor offered, but do it better and right. They ultimately used Levco Builders for the remodeling job, but this experience got Levitch thinking about how he could assist his clients with financing. So he approached several different financing companies to find a solution.
One financing company said Levitch wasn’t eligible because he didn’t do a high enough volume of work; another company offered him financing options for potential clients but at astronomical rates. But Levitch wasn’t interested in offering his clients that type of financing. “I didn’t want my clients to deal with out-of-state companies or get involved in what I consider predatory lending practices that have humungous penalties and fees,” he says.
To circumvent a client’s financing obstacles, Levitch ultimately decided that he wanted to find a locally based lender that could quickly provide clients financing at decent interest rates. “I had to find somebody savvy in the banking world who understood what I was looking for,” Levitch says.
His search led him to Toni Smith, vice president and branch manager of DL Evans Bank in Meridian, Idaho. “DL Evans Bank provides consumer loans for home improvements at reasonable interest rates and a small fee,” Smith says. Banner Bank in the Boise, Idaho, area also provides similar loan services.
As a result, Levco Builders began offering potential clients financing options for their small to medium-sized remodeling projects in January through both local banks. Now during initial consultations with clients, Levitch can offer financing options as well as remodeling services. Interested clients receive a loan application that includes his company’s rubber stamp. They fill out the Idaho Standard dealer application, go to the bank and submit the form, along with their name, address, place of work and proof of income, such as a W-2 or current pay stub. The bank can then process the information within a day and tell the consumer if they qualify for a loan and for how much.
According to Smith, a home improvement loan through DL Evans Bank can be offered in multiple ways, such as secured or unsecured. For example, the bank can offer up to a $25,000 unsecured loan for three years. Or, if the loan is fully secured, a person could borrow up to 80% of the present value of their home.
“We offer various products under the category of home improvement,” Smith says.
The interest rates depend on the client. For a secured loan, the rate could be as low as 3 percent; unsecured loans could be as low as 7 percent. “Loan rates are based on the risk of the loan,” Smith adds.
Levitch plans on expanding his financing options one day to possibly include partially financing a client’s remodel out-of-pocket, if clients have the funds to cover a portion of the remodel readily available.
But he explained that he doesn’t want the focus of his business to be that he offers financing. “The focus is that I remodel and do great work, and I offer different ways to make it easier for clients to say yes,” Levitch says. “So this is a tool in the toolbox to help my clients say yes.”—Amalia Deligiannis