If you’ve ever had your roof replaced, you know that installing a new roof is not cheap. But like many other basic home care tasks, the costs of waiting to fix a leaking roof or replace a failing one is much higher than the cost to reroof. Putting off a necessary roofing job can leave your home vulnerable to roof leaks, water damage, mold, foundation issues, and even electrical fires if the leaks are bad enough. Still, for many homeowners, new roofs can be hard to fit in the budget even if they’re needed. Fortunately, many good local roofing companies such as prime buyers report offer financing to help make the job affordable for customers regardless of budget.
Why consider roof financing?
Some homeowners have savings or a budget that can handle the cost of replacing an aging roof, and others know their roof is wearing out and proactively start saving. But roof failure can sneak up on homeowners, and most people don’t have a roof repair fund, so the unexpected costs of a new roof can be overwhelming and may even cause people to delay needed work.
Roof financing plans can get you the new roof you need without the financial pressure. Some benefits include low monthly payments, deferred upfront payments, low interest, delayed payments, and the opportunity to invest in a quality roof that will last a long time and give you great value rather than having to settle for a cheaper roof that needs to be repaired or redone sooner.
Financing options offered by some roofing contractors
Not all roofers offer financing, but those that do often have a range of options to give customers the type of financial help that best fits their needs and goals.
- Internal financing: Financing provided by the roofers themselves; sometimes referred to as company financing.
- External financing: Financing provided by an outside lender such as a bank or credit union. External financing can be arranged by the customer or the roofing company.
- No down payment or upfront payment: Financing terms that allow the borrower to accept the loan without having to make a down payment or upfront payment; the length of the loan may be longer or the monthly payments may be higher to make up for the lack of down payment.
- Payments through property tax bills: Certain types of loans, such as FHA Title I loans, allow you to finance your project and then add the amount financed, interest, and fees to their property taxes to pay over time as part of your annual tax bill or mortgage payments.
- Partial payments in conjunction with partial financing: Splitting the financing by paying part cash and taking out a loan for the remainder can be a smart way to finance a new roof. Depending on the size of the down payment or partial payment, the remainder may be much less than a traditional loan, so it will be paid off faster and incur less interest.
- Monthly payment plans: Some roofing companies allow customers to take out internal loans that include monthly payment plans.
- Low monthly payment minimums: Financing plans like these have flexible payments with low monthly minimums. Paying more than the minimum each month will settle the loan faster with less interest, but borrowers can pay back less in months when the budget is tight.
- Fixed-term loans up to 30 years: Fixed-term loans divide the total loan and interest into equal monthly payments for the life of the loan, often ranging from 5-30 years.
- Low-interest loans: Borrowers with good credit can find low-interest loans that charge a relatively small percentage of the amount borrowed. This can save money over the life of the loan and may be coupled with a larger down payment or available on smaller loans.
- Personal loans: Banks can make personal loans to individuals and homeowners to cover roof installations. These often require very good personal credit and often have shorter loan terms and higher interest rates, so they’re usually only good options for homeowners with little or no debt, large incomes, and very good credit.
- FHA loans: Federal Housing Administration loans are usually used to finance home improvement projects, including reroofing. These loans can usually be arranged through qualified lenders and are insured by the FHA.
- HELOC loans: HELOC or home equity lines of credit are lines of credit homeowners can draw against the value of their homes and repay over a specified period. In a HELOC loan, your home serves as collateral and you only need to pay the amount spent on the project rather than the whole amount you can borrow against.
If you need financing for a new roof, talk with your roofing company about options they have available. Be ready to discuss the project costs and your budget, including roof size and complexity, preferred roofing materials, amount you can put down (if needed), monthly payment ability, and more. Then, be sure to carefully review all terms so that you completely understand the loan agreement and financing repayment plan. Evaluate interest rates and terms to ensure that you’re getting a fair deal. As with any kind of contractor services or financial arrangement, it’s smart to get several bids or options to compare rates and overall cost.
Internal financing versus outside financing
Internal financing is financing done within the company. With internal financing, the roofing company finances jobs by using their own funding and savings to cover current client jobs. This isn’t often done, as most roofing companies are small enough that it’s hard for them to finance client jobs. Some larger roofers may offer this option, however.
Outside financing, also known as external financing, is when the roofer works with a bank or credit union to secure financing on behalf of their clients. Companies can also get volume discounts for clients or better rates than traditional financing through lenders. Another way outside financing works is when homeowners work with their own bank to secure financing before hiring the roofer and then uses their own line of credit, sometimes home equity, to pay for the roofing work. Then they pay off the loan over time directly to their bank or credit union.
Why choose a roofing company that offers financing?
Roofing contractors understand that their services are expensive and that homeowners can’t always afford a new roof. So many offer financing options that get the clients the reroofing services they need without all of the financial stress. Working with the roofing company to coordinate the financing can also get the best rates for consumers. Banks and credit unions can offer better terms and rates to roofing company customers, especially for companies they work with often. And working through the roofing contractor can save you the time and effort of finding your own lender.
Pros and cons of new roof financing
Depending on the bid, your budget, and the financing available to you, there are pros and cons to consider when deciding to take out a loan or financing your new roof.
|Pros of roof financing||Cons of financing a new roof|
|Get a new roof without delay, avoiding possible further damage||Some financing plans take longer than others to be approved|
|Get the roof you really want and need without having to worry about budget||Large financing amounts can encourage consumers to spend more than they need to|
|Flexible interest rates and repayment terms to fit a variety of budgets||Consumers with poor credit may have to agree to poor terms or high interest rates|
|Most financing plans have lower rates than average credit card rates||Financing plans can save money over credit cards, but they are usually more expensive in the long term than paying cash|
Should you get a new roof through financing?
If you can pay cash, experts usually recommend doing so. Anytime you borrow money, take out a loan, or sign on to long-term payment plans your credit can take a hit and you’ll end up paying interest on the loan. However, financing some or all of the reroofing can give you the freedom to get a new roof when you need it without sacrificing value, quality, or your peace of mind.
Remember that this is a financial decision, though, and do your due diligence. Carefully review the terms of the deal, make sure you’re not paying too much in fees and interest, and demand that the roof you invest in meets your needs in terms of quality, value, and longevity.