Contractor POS Financing and Dealer Fees Explained
Contractor point-of-sale financing (GreenSky, Hearth, Acorn, PowerPay, Service Finance) bakes a 4-15% dealer fee into the project price. Ask for the cash price explicitly — it's often 5-15% lower than the financed price. Covers when contractor POS financing is the right answer and when it's not.
Contractor point-of-sale (POS) financing is the 'finance it with us' offer your contractor or dealer makes at the end of a bid or sales meeting — often for HVAC, roofing, solar, windows, siding, kitchen remodels, and other mid-ticket projects. The dominant platforms are GreenSky, Hearth, Acorn Finance, PowerPay, Service Finance Company, and various Synchrony-backed dealer programs. On paper, the offer looks clean: you sign a single financing document with the contractor, the contractor gets paid on completion, and you make fixed payments over 5-15 years. The catch is the DEALER FEE. The contractor pays the financing platform a fee (typically 4%-15% of the loan amount) to access the financing program — and that fee is baked into the price of the project. Your $20,000 HVAC installation with '60-month 0% financing' probably priced in a $1,500-$3,000 dealer fee that would not have existed if you paid cash or used a personal loan directly. Said differently: the contractor's CASH price is often 5%-15% lower than the FINANCED price for the same work. Contractor POS financing is genuinely the right answer when: (a) the program is a true 0% APR promotion and the dealer fee is modest (<5%), (b) you cannot qualify for a personal loan or HELOC at a competitive rate, or (c) the speed and convenience at the point of sale outweigh the fee premium. It's the wrong answer when: (a) you have a prime personal loan offer at a competitive rate, in which case negotiating the cash price with the contractor and paying with a personal loan saves money, (b) the program is a promotional 'teaser' rate that expires into a much higher standard APR, or (c) the dealer fee is large (10%+) and the contractor isn't willing to lower the cash price to offset it. The single most important negotiating move: ALWAYS ask for the cash price. Say explicitly, 'What's the price if I pay cash or with my own financing?' If the contractor won't quote a different price, the dealer fee is either small or is being hidden in the margin.
Key Facts
- Contractor POS financing platforms (GreenSky, Hearth, Acorn, PowerPay, Service Finance) charge the contractor a dealer fee — typically 4%-15% of the loan amount — that is baked into the project price.
- The cash price for the same project is often 5%-15% lower than the financed price because the dealer fee is not paid when there's no dealer financing.
- GreenSky was sold by Goldman Sachs to Sixth Street in March 2024 for approximately $500 million — a reported $1.7 billion loss. Synovus Bank is now the sole origination partner.
- Many contractor POS programs advertise '0% financing' but the APR kicks in at 25-33% after a promo period — sometimes with deferred interest structure (see Q63).
- The single most important negotiating move: ask for the CASH PRICE explicitly. If the contractor quotes a different price for cash vs financing, the dealer fee is visible.
- For prime-credit borrowers, a personal loan at 7-10% is almost always cheaper than contractor POS financing once you account for the dealer fee baked into the financed price.
Decision Rules
If: You have prime credit and a contractor offers 'special financing'
Then: Ask for the cash price first. Get a personal loan prequalification (soft pull) from LightStream or SoFi. Compare the contractor's cash price + your own financing against their financed price.
If: The contractor offers true 0% APR with no dealer fee premium (cash price and financed price are the same)
Then: Use the contractor financing — it's legitimately free capital.
If: The contractor offers '0% for 18 months' but won't quote a cash price
Then: The dealer fee is being hidden in the margin. Negotiate harder or walk.
If: You have subprime credit and can't qualify for a competitive personal loan
Then: Contractor POS financing may be the right answer. Still ask for the cash price and negotiate — some contractors will reduce the price for cash even for subprime borrowers.
If: The contractor's financing is deferred interest (see Q63)
Then: Avoid unless you are 100% certain of full payoff before the promo deadline. The retroactive interest risk is real.
If: You're buying HVAC, solar, roofing, or windows at the point of sale
Then: These categories are heavily saturated with contractor POS financing. Expect dealer fees to be on the higher end (8-15%). Shop cash prices aggressively.
California-Specific
- California's door-to-door solar and HVAC sales environment drives heavy use of contractor POS financing. California consumer protection laws require specific disclosures but do not ban the dealer-fee practice.
- California's Contractor State Licensing Board (CSLB) regulates contractor conduct including financing disclosure, but enforcement against hidden dealer fees is limited.
- Synovus (GreenSky's new origination partner as of 2024) is a Georgia-based bank — California-specific lending law applies when they originate in California.
Common Misconceptions
'0% financing' from my contractor is free capital.
It's free on the interest side only IF it's true 0% APR (not deferred interest). The dealer fee baked into the price is still a real cost. The cash price is often 5%-15% lower for the same work.
The contractor's 'special rate' is only available through their financing.
It almost always is — because the contractor is getting a kickback structure through the financing platform. The same work done with your own financing typically comes with a lower price.
All contractor POS financing is predatory.
It's not all predatory — it's a legitimate product for subprime borrowers who can't access competitive personal loans, and for true 0% offers where the dealer fee is modest. The problem is opacity. Ask for the cash price and decide.
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