How to Calculate Financing Charges

An HVAC Contractor in Idaho asked:

How would you calculate financing charges ahead of time rather than recalculating at the kitchen table?

EGIA faculty member Gary Elekes started by saying that one should assume every customer is going to want financing, and every customer is going to be offered the option to finance.

Elekes went on to explain that the actual calculation of financing costs is a process called amortization. It involves spreading the cost of the job along the set period of time that the job would have to be paid back over.

Once you find the percentage of amortization that you need to account for on each job that you do through financing, assessing a charge is as simple as adding that percentage cost to the total cost of the job while you’re on the call.

“You really don’t want to be discounting from your standard price,” said Elekes. “But the actual cost itself is broken down into each job.”

Gary Elekes is serial entrepreneur with a passion for helping others become more successful by sharing what he has learned over the past 3 decades working closely with all facets of the contracting industry. During his career, Gary has held senior management positions at Lennox and Service Experts.

Our faculty members have also answered questions on other topics related to sales in the contracting world, including Selling Financing Options and Should Salespeople Pay for Financing Dealer Fees?

Hear more from our “Ask The Experts” faculty members on “Cracking The Code,” our weekly web series.

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