6 reasons customers use finance for home renovation projects
Friday 20th October 2023
The market size of the home improvement industry is over £15bn, increasing by 4.1% last year – and the home renovation boom shows no sign of slowing down.
Customers are spending more time at home than ever, with 44% of Brits working from home at least some of the time. So making the house a comfortable, functional and enjoyable place to be is high on the priority list.
There’s also the trend to improve rather than move house, fuelled by the ongoing cost-of-living crisis, surging mortgage rates and an uncertain property market.
Home improvement projects aren’t cheap, though, and finding the money to fund renovations upfront can be a challenge for customers.
That’s where finance comes in.
In this guide, we’re sharing the top 6 reasons customers are using credit to fund their home improvement projects.
1. Spread the cost of significant purchases
DIY is on the rise and, as a result, customers are looking for more affordable ways to purchase the tools they need.
Research tells us that over 43% of tradespeople have been forced to increase their prices, driving up the price of professional renovation projects. This is fuelling a rise in customers taking on more complex DIY projects – and, of course, a rise in demand for the tools they need to complete them.
Flexible finance options allow customers to spread the cost, eliminating the concern that they have to stump up the cash to fund their whole project upfront. Customers are more likely to take on an exciting DIY project if the cost is more manageable compared to calling the professionals in.
2. Make home improvements happen sooner
Once a customer has a clear idea of the improvements they’d like to undertake, it’s likely they’ll want to get going straight away.
UK homeowners spend £1,739 on average on home renovations, and not everyone will have that kind of money ready to go. While your customer’s waiting for their savings to grow, they’re eagerly curating mood boards and shopping around for the best prices.
You can help fast-track your customers’ home improvement projects by offering the option for them to spread the cost. Whether you choose to provide credit with or without interest, allow your customers to spread the cost over a timeframe that suits them rather than having to pay for it all upfront.
3. Ease the financial burden of unexpected expenses
Some home improvement projects are planned well in advance, while some customers need to undertake essential upgrades or emergency works. Unexpected expense can be a shock to a customer’s finances, but you can ease some of the stress by offering payment options such as buy now pay later finance. This allows customers to get their home improvements sorted straightaway, giving them a bit of breathing room to get their finances in order.
With buy now pay later, customers can either settle their agreement early (sometimes for a small £29 fee) or spread the cost over a series of fixed-rate monthly repayments following the deferral period. Giving your customers the option to pay in a way that suits them builds trust – making them far more likely to choose you over your competitors.
4. Go above and beyond the essential
Customers paying for large-scale home improvements, equipment or tools upfront may be naturally more limited by their budget. They might only purchase the essentials or stick to a lower-end range.
Finance options give customers greater flexibility on their budget. What might be too expensive to pay for upfront could fit nicely into a customer’s monthly budget. This could persuade customers to upgrade to the goods they really have their eye on or add extra items to their basket that will allow them to take their project to the next level. In fact, our research shows that 40% of home improvement retail customers spent more because finance was available.
Novuna’s max loan technology gives your team the ideal upsell opportunity too. We’ll tell you the maximum amount a customer can borrow, so you can help to find the ideal products to fit their budget.
5. Stop procrastinating
34% of Brits put off DIY jobs because they don’t have the right tools, while over half simply can’t afford to complete household tasks. It can be easy to put off a home improvement project, and even easier when a customer sees the total at the checkout…
Parting with a large sum of money upfront can feel daunting, and many customers may procrastinate rather than buy the goods they need. Accelerate purchasing decisions by providing a more attractive way to pay.
Our unique tailoring technology goes one step further. We allow eligible customers to adjust the terms of their agreement (such as loan term, amount or deposit) without needing to reapply, turning potential declined applications into accepted ones.
6. Take advantage of 0% interest
Many of our home improvement retail partners choose to offer interest free finance, which allows customers to spread the cost of their purchase over a set length of time without incurring any interest.
This allows customers to get the item they want, when they want it without paying a penny more than they would if they were simply buying it with cash. That can make interest free finance a more attractive option compared to other means of payment, such as credit cards or interest bearing credit where customers pay more for the convenience of spreading the cost.
If you wish to offer 0% credit to your customers, you may need to pay a subsidy to your retail finance provider. But don’t let this cost put you off – you may well enjoy increased sales as a result of offering this attractive finance option. It will give you a valuable marketing tool, allowing you to entice more customers to shop with you.
How to start offering home improvement finance
As you can see, there are several reasons why customers might choose to pay using finance. When you work with a reliable retail finance provider like Novuna Consumer Finance, you can give your customers more flexible ways to pay. Outsmart the competition and give your customers confidence at the checkout.
