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4 Hidden Roof Financing Fees

January 19, 2024 | 3 min. read

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Embarking on a roofing project is a significant undertaking, and financing becomes a crucial aspect of the journey for many homeowners. While roof financing can be a viable solution to manage upfront costs, it’s essential to tread carefully and be aware of the potential hidden costs that may lurk beneath the surface.

Rescue My Roof has been working with homeowners for over a decade, helping them find roofing solutions that meet their home’s needs and don’t break the bank. Today, we’ll walk you through the hidden fees associated with financing and give you the tips and tricks you need to avoid them. 

This article will unravel the intricacies of roof financing and shed light on the hidden costs homeowners should consider before committing to a financing option. Ultimately, you’ll know if financing your roof replacement is your best option.

4 Financing Fees to Watch Out For

Financing may be a great option to spread out roof payments – but they do come with a catch.

There are a lot of hidden fees homeowners may not be aware of when researching financing options. Here are the top four hidden fees to watch out for. 

1. The Introductory Interest Rate

Financing companies often use introductory interest rates to draw homeowners in. But what homeowners don’t know is that the lower interest rate has an expiration date.

When the introductory interest rate ends, if the balance is not paid in full, your loan will revert to a higher interest rate, back-dated to the original start of the loan. 

If financing is the only option to pay for your roof, introductory interest rates and subsequent higher interest may not be avoidable. You must read through the terms of your loan and know everything that goes into it to avoid other fees.

Additionally, it may be ideal to budget so the roof replacement cost is fully paid off before the introductory period ends. This may be a stretch, but it could save you thousands of dollars in interest. 

2. Merchant’s Fees

Most roofing contractors that offer financing do so through a third-party lender. Merchant’s fees are charged to the contractor, and the better the loan terms, the higher the merchant’s fee. This fee will consequently be passed on to the homeowner. 

For example, Rescue My Roof once offered a 0% interest, 60-month loan. The merchant fee was 19%. So, if the actual price were $10,000, the homeowner would pay over $12,000 to cover the merchant fee. 

Most merchant’s fees are between 5-8%. As a result, you will pay more with a finance loan than a cash or check price. 

3. Miscellaneous Fees & Charges 

Beyond the interest rates, roof financing may have various fees and charges. 

Origination fees, closing costs, and administrative charges can quickly add up, significantly impacting the overall cost of the financing. Homeowners should thoroughly review the financing agreement and seek clarification on any hidden fees that might not be immediately apparent.

4. Prepayment Penalties

Some financing agreements come with prepayment penalties, meaning homeowners will be charged additional fees for paying off the loan early. 

While it seems counterintuitive, understanding the implications of prepayment penalties is crucial for those who want to clear their debt ahead of schedule, perhaps after a windfall or refinancing.

Thoroughly read the terms of your loans, looking for any penalty fees or other hidden fees. If you find the price of your roof slowly being driven up by hidden fees, consider an alternative loan or form of payment. 

Avoiding Hidden Financing Fees

Roof financing can be a valuable tool for homeowners facing the daunting costs of a roofing project. However, the hidden costs associated with financing should not be underestimated. 

By thoroughly researching and understanding the financing agreement terms, homeowners can navigate the complexities and make informed decisions that align with their financial goals. Awareness of potential hidden costs ensures that the financing journey leads to a secure and stable roof without unexpected financial burdens.

Always read the terms of your loan and look for:

  • How much is being financed
  • The interest you’ll pay over the loan length
  • Fees incorporated into the loan
  • Penalties for late payments or going past the introductory length

As a rule of thumb, if it seems too good to be true when you’re looking over the loan, it probably is. Consider other loans through a bank or credit company, or find other roof payment options.

Learn more about paying for your roof replacement with “How Can I Finance My Roof Replacement” and “6 Ways to Pay for a Roof Replacement.” 

Are you looking for a reputable roofing contractor in southeastern Wisconsin? Rescue My Roof is ready to help. Contact us today to get a free estimate