Dealer Fees in Contractor Financing: How Much Are You Leaving on the Table?

If you have looked into contractor financing and noticed that you receive less than the full project price when a customer finances, that deduction is called a dealer fee. It is one of the most important numbers in contractor financing and most contractors do not think about it clearly until they have been paying it for a while.

Here is a complete breakdown of what dealer fees are, how much they cost across major platforms, and how to evaluate whether you are actually paying more than you need to.

What a Dealer Fee Is

A dealer fee, sometimes called a merchant discount or merchant fee, is the percentage of a financed loan amount that gets deducted from the contractor’s payout before disbursement. The financing company collects it as compensation for providing the financing product, particularly on lower-rate or promotional offers where they are giving up interest income.

Here is how it works in practice: A homeowner finances a $20,000 roofing job through a platform that charges you an 8% dealer fee. The platform pays out $18,400. You do the $20,000 job and collect $18,400. The $1,600 difference is the dealer fee, gone before you ever see it.

For standard interest-bearing loans, dealer fees typically run 3 to 6 percent. For promotional 0% APR programs, they jump to 8 to 15 percent or higher, because the financing company needs to recover the interest income they are waiving for the homeowner.

Dealer Fees Across Major Platforms

The Annual Fee vs. Dealer Fee Math

Hearth’s model is structurally different from every other platform on this list. Instead of dealer fees, they charge an annual subscription. The Pro plan runs approximately $1,799 per year (as of early 2026). You pay that once a year, regardless of how many jobs you finance.

Here is the comparison at different volume levels assuming an 8% average dealer fee on other platforms:

The break-even point sits around $22,500 in annual financed volume. Below that, dealer fee platforms may cost less. Above that, Hearth’s flat fee starts pulling ahead. At $100,000 or more in annual financed volume, the savings compound significantly every year.

Why Dealer Fees Cost More Than You Think

The compounding problem with dealer fees is that they are invisible at the point of sale. You quote $20,000, the homeowner signs for $20,000, and you think you closed a $20,000 job. But you actually closed an $18,400 job with an 8% fee. That $1,600 is gone.

If you do this 20 times a year at an average financed amount of $18,000 with an 8% fee, you are paying $28,800 per year in dealer fees without ever writing a check. It just never shows up in your account.

Some contractors build the dealer fee into their quotes. If a $20,000 job at cost needs to net $20,000, they quote $21,740 so that after the 8% fee ($1,739) they come out at $20,001. This is a legitimate approach but it raises your quoted price, which can hurt you on competitive bids.

How GreenSky’s Dealer Fees Can Compound on Promotional Financing

GreenSky’s maximum dealer fee is documented at 26.6% in their public materials. That is not a typo. On specialty promotional products with very long 0% periods or other enhanced terms, the fee can reach that level.

At 15%, a $25,000 job nets you $21,250. At 26.6%, that same job nets you $18,350. You are doing $25,000 worth of work and collecting $18,350. The homeowner has no idea. They see a clean monthly payment and no interest. You absorb the entire cost of subsidizing that rate.

This is why contractors who run high promotional financing volume tend to eventually move away from GreenSky-style per-transaction models and toward subscription-based platforms.

Dealer Fees vs. the Alternative: Not Closing the Deal

It is worth keeping the dealer fee in proper perspective. A 5% dealer fee on a $15,000 job costs you $750. If the alternative is losing that job to a competitor who offers financing and you do not, you gave up $15,000 of revenue to save $750.

The better mental model is to think of dealer fees as a cost of financing, the same way you think about material costs or labor. As long as your overall margin holds and financing is helping you close jobs you would otherwise lose, the dealer fee is a cost of doing business that pays for itself.

Where dealer fees become a problem is when they are high enough to erode your margin on jobs you would have closed anyway at cash pricing. If 70% of your jobs are financing and you are paying 10% dealer fees, you are giving up a lot of margin that could stay in your business.

What Contractors Should Actually Do

Step one is to know what you are paying. Pull your last 12 months of financed volume and multiply by your average dealer fee percentage. If you have never done this math, the number may surprise you.

Step two is to compare that to Hearth’s annual subscription cost. If your dealer fees exceed $1,799 annually, Hearth is already saving you money on a pure cost basis, even before accounting for the additional software features and broader FICO coverage you get with the subscription.

Step three is to evaluate your volume trajectory. If you are growing and expect to finance more jobs next year than this year, the case for a flat annual fee gets stronger every year. Dealer fees scale with revenue. A flat subscription does not.

The math is not complicated. It just requires knowing your numbers, which most contractors do not track specifically for financed projects. Run it once and you will know exactly where you stand.