Millennials & Gen Z Don't Want to Pay Upfront - And That's an Opportunity

Big upfront costs – like paying a contractor with a briefcase full of cash – can feel daunting to Millennials and Gen Z. These younger homeowners are reshaping consumer expectations, seeking flexibility, convenience, and instant value in every purchase. They've grown up with one-click purchases and "buy now, pay later" plans, so the traditional model of large upfront payments for home improvements is increasingly a turn-off.

For forward-thinking contractors, this generational shift isn't a problem — it's an opportunity. By meeting Millennials and Gen Z on their terms with modern financing options and smoother sales processes, contractors can win more business and avoid losing jobs to more adaptable competitors. In fact, with U.S. remodeling spending projected to reach $608 billion in 2025 – and about 70% of homeowners planning to use financing for major projects – offering payment flexibility has gone from a nice-to-have to a near necessity.

Why Younger Homeowners Think Differently About Money‍

Millennial and Gen Z homeowners don't approach big purchases the same way their parents did. Student debt is a major factor. Millennials carry an average student loan balance of about $40,000, and more than half of those with loans say this debt has forced them to delay important financial moves like buying homes or renovating. Heavy debt loads and the high cost of living mean younger buyers are budget-conscious and often cash-strapped. Dropping a huge sum upfront on a kitchen remodel or new roof can feel impossible or unwise to them, even if they need the work done.

Beyond debt, these generations are the product of the subscription economy. They're used to paying for services and products on a monthly basis – from Netflix and Spotify to car leases and cell phones. Over 30% of Gen Z and nearly 40% of Millennials now rely mainly on subscriptions for everyday needs. This mindset conditions them to expect small, predictable payments instead of big one-time hits to the wallet.

It's no surprise that "Buy Now, Pay Later" (BNPL) services have exploded in popularity among young consumers. Between 2019 and 2021, BNPL usage among U.S. Millennials more than doubled (from 17% to 41%), and Gen Z's usage jumped sixfold (from 6% to 36%). In other words, a huge portion of younger adults have already embraced paying in installments for everything from gadgets to clothing.

When it comes to home improvement, high upfront costs feel like friction in the buying process for these customers. A hefty down payment or full project fee can trigger sticker shock. Often, when a homeowner is faced with a price tag they didn't expect, they either cut back the project scope or delay it in hopes of saving up. Neither outcome is good for them (they don't get the home upgrade they wanted) or for the contractor (who loses a bigger job or any job at all).

Millennials and Gen Z, in particular, have a low tolerance for such friction – they value instant gratification but also financial prudence. If an option lets them get the project done now without paying everything now, they'll gladly take it. A recent survey noted that nearly half of U.S. consumers said installment plans would allow them to spend 10–20% more on purchases than they would using a credit card alone. The message is clear: Remove the upfront financial barrier, and younger customers are far more likely to say "yes" to home improvements.

The Financing Advantage: Making "Yes" Easier‍

Offering financing isn't just about closing a sale – it's about aligning with how younger generations prefer to shop. If you can let a customer spread a $10,000 project over monthly payments, it suddenly feels a lot more feasible to them. Contractors who offer financing see a remarkable boost in sales.

Studies have shown that providing a financing option can increase close rates by roughly 18–20% and raise average project sizes by 30–50%. Think about that: simply by saying "We have a payment plan for this," you could win almost 20% more jobs, and those jobs might end up 30-50% larger because the customer can afford the "upgrade" or full scope when it's broken into payments. Instead of opting for the cheapest basic materials or phasing a project out over the years, homeowners with financing tend to choose better quality options and do more work overall.

These benefits aren't just theoretical. Across the retail and home improvement industries, we see the same trend: payment flexibility sells. For example, merchants who added "buy now, pay later" plans have noted a 17% increase in incremental sales and a 15% higher average order value on their products. When cost barriers are lowered, customers are far more likely to proceed with a purchase and even to spend a bit more.

Financing essentially turns "I can't afford it" into "I can manage this." It changes the conversation from total price to monthly price, which is exactly how many Millennials and Gen Zers budget their lives. They're used to asking "How much per month?" rather than "How much total?" By offering a way to pay over time, you make that initial "yes, let's do it" much easier to achieve.

It's also worth noting that offering financing can be a competitive advantage. Younger homeowners will often choose a contractor who provides a financing option over one who doesn't if the upfront price is a hurdle.

In a survey of top-performing home improvement companies, 96% of the top 50 contractors offered financing, compared to only 83% of the bottom 50. The best firms in the business know that customer financing for contractors isn't just a nice add-on – it's a key sales tool.

If you're not proactively pitching an affordable payment plan, you may be ceding customers to someone else who will. In short, integrating financing into your sales strategy reduces friction, increases trust, and often clinches the deal faster.

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Common Contractor Concerns — and Why They Don't Hold Up‍

Despite the clear advantages, some contractors have understandable concerns about offering financing. Let's address a few of the common myths and objections:

"It's too complicated and time-consuming." Not anymore. Implementing contractor financing used to involve piles of paperwork and weeks of bank approvals, but today it's a streamlined digital process. Modern financing companies for contractors have online platforms that make financing as easy as taking a credit card. In many cases, your team can input a customer's info and get approval in seconds, often while you're still at the kitchen table discussing the project.

Thanks to tools like soft credit pulls (which give a quick approval decision without impacting the customer's credit score), the financing application can be instant and hassle-free. New customer financing software for contractors can integrate with your existing sales workflow. For example, if you're already collecting the client's name and address for a proposal, those systems can auto-fill the financing form with the same data.

In short, offering financing today is nothing like dealing with a bank loan in the past – it's faster and more automated, built for the convenience that Millennials and Gen Z expect.

"My customers won't go for it (or don't need it)." Don't be so sure. We've already seen that younger consumers actually expect financing options – and not just for cars or gadgets, but for home services too. Many of your customers, especially the younger ones, will appreciate that you have a pay-over-time plan. A huge share of homeowners actively plan to finance big projects.

Even older generations are warming up to financing, as evidenced by the growing use of installment plans among Gen X and Boomers in recent years. Offering a financing choice doesn't alienate customers; it reassures them. They don't have to be embarrassed if they can't pay all at once – you've built a solution for that.

Consider the competitive landscape: if a homeowner can pay cash and truly isn't interested in financing, offering it won't hurt – they can simply decline. But if someone does need financing and you don't have it, you'll likely lose that customer.

"It will take too long and slow down my sales process." This concern is rooted in the old way of thinking. Yes, if financing meant sending your customer to a bank branch to fill out forms and wait a week, it would kill the momentum. But those days are over. Home improvement lenders for contractors now operate with lightning speed. Many platforms provide instant or near-instant approvals (often under 60 seconds), meaning you can present financing without derailing the flow of the sales call.

It's crucial, especially for Millennials and Gen Z, that the process be quick – this group has a markedly low tolerance for delays, and they tend to abandon applications or forms if things take too long. One analysis found that if a digital financing application takes more than 2 minutes, nearly 60% of customers will give up before finishing!‍

The good news: the best home improvement financing for contractors is designed to stay well under those thresholds. With a modern financing app, your customer can get approved while you both discuss the project. In practice, incorporating financing can speed up the sale – you're able to address the "Can I afford this?" question on the spot.

"Only customers with perfect credit will qualify, so why bother?" This is a misconception because today's contractor financing options cover a wide spectrum of credit profiles. Thanks to what's known as the "waterfall lending model," a single application can tap multiple lending partners to find an offer for customers with varying credit scores.

For example, FinMkt's waterfall platform funnels each financing request through a customized sequence of lenders and plans with one universal application, so even if a prime lender declines, a second-look lender might approve the loan. The contractor and homeowner see a seamless process – they just get presented with available offers in real-time, while behind the scenes, the system is doing the work of finding a match.

This means you can confidently say, "We have financing for all kinds of customers." Most applicants with decent credit will get approval of some sort, and even those with softer credit have a chance. Industry data from multi-lender platforms shows significantly higher approval rates because of this broad coverage approach.

"What about the cost or risks for me as the contractor?" This is a fair question – after all, nothing is truly free. Typically, when you offer customer financing for contractors, you might pay a merchant fee or subsidy to the lender (often on the order of a few percent of the project price, depending on the promo). However, this cost can often be built into your pricing or passed on, just as businesses account for credit card processing fees.

Also, consider the return: if financing increases your close rate by 20% and job size by 30%+, the small fee is more than offset by the additional revenue. Moreover, many financing programs will pay you (the contractor) upfront – you get the full project price (minus any fees) directly from the finance company once the job is agreed upon, and they collect from the homeowner over time. That means your cash flow isn't hurt at all; in fact, you might get paid faster than waiting for a homeowner to gather funds.

As for risk, the financing provider assumes the credit risk, not you. You're not chasing down payments – the lender handles that. So, offering financing can reduce your risk of non-payment compared to self-arranged payment plans.

Easy Ways to Start Offering Financing Today‍

So, you're convinced that offering financing could help your business, but how do you do it? Here are some straightforward ways to get started:

Adopt a "waterfall" financing platform: One of the quickest ways to ramp up financing is to partner with a multi-lender point-of-sale platform. With a single integration, you can offer real-time financing offers across the credit spectrum to your customers. In practice, this means when you submit a customer's application, the platform will automatically route it to a network of home improvement lenders and return the best offer(s) available.

The customer might get several options (different term lengths, interest rates, etc.) and can choose what works best for them, all within seconds. This ensures you're providing the best contractor financing for customers of all credit backgrounds, without having to manage multiple lender relationships yourself.

Make financing part of every sales pitch: Don't wait for a customer to ask if you have financing – bring it up early in the conversation. A great tactic is to present your proposal in two ways: the total project price and an estimated monthly payment. For example, "This project will cost $15,000, which would be about $150 a month with our financing program."

Framing the cost in monthly terms immediately puts the customer at ease and makes the project feel attainable. It also normalizes financing as a standard option. Train your sales team to confidently discuss financing benefits (like "no interest for 12 months if you qualify" or "low fixed APR options") as a value-add, not a last resort.

Choose user-friendly, fast technology: When evaluating customer financing software for contractors, prioritize platforms that are mobile-friendly, fast, and simple. Your team will likely be using this on the go – maybe in a client's living room or on a job site – so it should work smoothly on a tablet or phone.

The interface should be simple enough that you can walk a homeowner through it in real-time. Speed is crucial: look for systems that deliver instant credit decisions (under a minute) and use soft credit inquiries to pre-qualify. This way, your customer isn't scared off by a hard credit pull just to see if they could finance.

Leverage promotional financing offers: A powerful way to entice customers is by offering promotional financing deals that many home improvement finance companies provide. For instance, you might advertise "12 months same-as-cash" (no interest if paid within a year) or low fixed APR plans for those with good credit.

These promos create a sense of urgency and bargaining – the customer feels they're getting a special deal and solving their payment concern. Work with your financing partner to understand what promotions you can offer and when. Promotional plans can significantly boost conversion rates because they remove the cost of borrowing as an objection.

Integrate financing into your workflow: Set yourself up so that financing isn't an afterthought but a seamless part of your process. This could mean integrating the financing application into your CRM or sales software, or simply having a routine: every time you prepare a quote, you also prepare a financing offer.

Many contractors find success in assigning a point person or training their sales reps specifically on financing, so they can confidently answer questions about terms and processes. Having a knowledgeable team and an easy process builds trust. Also, lean on your financing partner's resources – most home improvement lenders for contractors will provide marketing materials, online calculators, and even in-person training to help you promote financing.

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Final Takeaway: Meet Them Where They Are‍

Millennials and Gen Z are rapidly becoming the dominant customer base in the home improvement market – and they're bringing their payment expectations with them. For contractors, the message is clear: to win their business, you need to meet them where they are. That means recognizing that no, they don't want to pay everything upfront, and adjusting your sales strategy accordingly.

Contractors who adapt by embracing tools like customer financing for contractors (especially modern, multi-lender solutions) are poised to capture more leads, close more deals, and grow their business. It's not about pushing anyone into debt; it's about giving your clients a convenient choice that aligns with how they manage their money in 2025.

By leveraging the right financing programs and integrating fast, friendly financing offers into your workflow, you can turn a firm "no" into an enthusiastic "yes." You'll stand out from competitors still stuck in the old paradigm, and you'll likely see higher customer satisfaction – after all, you're making it easier for people to get what they want.

In the end, offering financing is about removing obstacles. The contractors who remove the obstacle of upfront cost will ride the wave of Millennial/Gen Z demand, while those who ignore the trend risk being left behind. Home improvement projects are big investments, and today's younger homeowners want partners who understand their needs. The opportunity is yours for the taking — are you ready to turn "I can't afford it" into "Let's do it"?

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