Financing That's Right on the Money

For a homeowner, the purchase of a heating or air-conditioning system is a big deal — selecting the right system can be a complex and expensive decision. When the contractor provides a quick and easy way for the homeowner to finance this purchase, it often relieves some of the stress and makes it that much easier to close the deal. It's a winning scenario for everyone in the HVACR supply chain.

For HVACR dealers, GE Money's Sales Finance business has been an important partner in providing credit card and financial services for consumers. When credit is available, HVACR products and systems become more accessible for these consumers, allowing dealers to sell more products. That ultimately benefits the distributors as they move more products through the supply chain. GE Money's Home Improvement division, which encompasses loans for HVACR customers, has originated more than $15 billion in loans. Overall, GE Money's Sales Finance, part of General Electric Company's GE Capital division, has extended more than $146 billion of credit to 50 million consumers in the United States since January 2008.

With a strong track record in home improvement lending and deep industry expertise, GE Money's Home Improvement division offers a range of promotions and payment options, including an unsecured, revolving line of credit that consumers can use for current and future projects. “Our focus is on traditional home improvement loans, primarily specialty loans that include HVACR,” says Bruce Christensen, vice president and general manager for GE Money's Home Improvement industry. Its focus, Christensen says, is on products, not remodels, particularly for items priced under $20,000.

GE Money has made the process simple for HVACR dealers and their customers. At the point of sale, which is usually at the customer's home, the dealer can provide a credit application on the spot and call in the information to GE, making credit available immediately. “That enables HVACR dealers not only to have a contract for new equipment but also to have the financing already secured,” Christensen says. “It's easy for the consumer.” In addition to calling in credit applications, GE Money products allow for applications over the fax and through the Internet.

While Christensen says it's difficult to ascertain whether the ease of credit actually creates more sales, the data show that the consumer who finances an HVACR purchase through dealer financing can spend about 20 percent more than the consumer who pays for the purchase with a credit card or cash. For dealers, a financing option means greater opportunities to upsell higher SEER levels. He notes the importance of financing, especially when one considers that HVACR purchases are often unplanned. When an air-conditioning system goes out in the middle of the summer, a homeowner has no choice but to replace it — and financing is very often the most attractive and available option.

Because of its specialty in home improvement, GE Money has greater insights into the HVACR industry. Christensen says his division has strong relationships with most of the major HVACR manufacturers — Lenox, Bryant, Rheem, Nordyne and York — as well as with the wholesaler distributors, most notably Watsco. Because of the strong relationships between the manufacturers and GE Money, the manufacturers may pick up some of the costs of a credit promotion, making dealers more apt to participate and giving them a “bigger bang for your buck as it relates to their marketing dollars,” Christensen says.

The Home Improvement division works with dealers through a combination of inside and field sales teams. Because its sole focus is on this market, the sales team and management involve themselves in all aspects of the HVACR industry, attending trade shows and serving on industry committees and working groups. “We don't want to be just in an industry; we want to be part of an industry. We do get very actively involved,” says Christensen.

Both Christensen, who has been general manager of GE Money's Home Improvement division since 2002, and Jeff Shawd, vice president of Marketing for GE Money's Home Improvement division, are active in Harvard University's Joint Center for Housing Studies' Remodeling Futures Program. Christensen serves on the Joint Center for Housing Studies' Research Planning Committee. GE Money's Client Development Manager Bob Maisel works with HARDI. “If we want to understand how we can make it easier for our customers and the contractors, then we have to understand the industry,” he adds.

In addition to working with industry groups and individuals throughout the HVACR supply chain, GE Money has sought out dealers through its Home Improvement Advisory Board, which it established in 2007. Bringing together 12 dealers from around the country who don't compete with one another was an opportunity “to glean information from them as to what's happening in their specific marketplaces and what types of trends they're seeing,” Christensen says. “We also wanted their feedback. What are we doing well? Where are the opportunity areas and what are your recommendations on how we can improve?”

With new regulatory reforms set to take place under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, GE Money has been working to ensure that it complies with the new regulations. The regulations, the majority of which take effect this year, provide for improved transparency between credit card companies and consumers. Under the CARD Act, credit card companies must give consumers 45 days of notice if they plan to increase interest rates. They are also prohibited from retroactively increasing interest rates for cardholders in good standing with the company and from arbitrarily changing their agreement with cardholders. Cardholders have the right to cancel their credit cards and pay any outstanding balances once interest rates are increased.