Financing Your New Roof
Compare payment options—from cash to contractor financing to home equity—and understand the real cost beyond the sticker price.
Financing Overview
Most homeowners don't have $10,000-$20,000 sitting in savings for a new roof. That's fine—financing options exist. But understanding APR, total cost of ownership, and predatory lending traps is crucial. The wrong financing decision can turn a $12,000 roof into an $18,000 roof over time. Here's how to avoid expensive mistakes.
Key Rule
Always shop rates before signing contractor financing. Contractor financing is convenient but typically 2-5% higher APR than credit unions or banks. On a $15,000 roof, that difference costs you $2,000-$3,000 over the life of the loan.
For cost estimates to plan your financing needs, see our Cost Guide.
Financing Options Compared
Cash Payment
Paying cash avoids interest entirely. But only do this if you have 6+ months of emergency savings remaining after payment. Depleting your entire savings for a roof leaves you vulnerable to unexpected expenses.
Pros:
- ✓ No interest or monthly payments
- ✓ Full negotiating power with contractors
- ✓ No debt on balance sheet
Cons:
- ✗ Depletes emergency savings
- ✗ Opportunity cost (money could earn returns)
- ✗ No credit building
Best for: Homeowners with strong cash reserves (6+ months expenses remaining)
Personal Loan (Bank/Credit Union)
Rates: 6-12% APR (good credit), 12-20% (fair credit), 20-35% (poor credit)
Terms: 3-7 years typical. Shorter terms = higher monthly payment, less total interest.
Pros:
- ✓ Better rates than contractor financing
- ✓ Fixed rate, no surprises
- ✓ No collateral (unsecured)
- ✓ Fast approval (1-3 days)
Cons:
- ✗ Requires good credit (680+)
- ✗ Higher monthly payments than long-term options
- ✗ Origination fees ($100-$500)
Best for: Good-credit homeowners who want control over loan terms
Home Equity Line of Credit (HELOC)
Rates: 7-10% APR (variable, tied to prime rate)
Terms: 10-20 year draw period, then repayment period. Interest-only payments during draw.
Pros:
- ✓ Lower rates than personal loans
- ✓ Flexible draw schedule
- ✓ Interest may be tax-deductible
- ✓ Reusable credit line
Cons:
- ✗ Your home is collateral (default = foreclosure)
- ✗ Variable rates can rise
- ✗ Closing costs ($200-$500)
- ✗ Requires 15-20% equity
Best for: Homeowners with significant equity who want low rates
Contractor Financing
Rates: 9-18% APR typical, sometimes 0% promotional (12-18 months with catch)
Terms: 3-10 years, often with early payoff penalties.
Pros:
- ✓ Convenient (one application)
- ✓ Easier approval for lower credit
- ✓ Sometimes 0% promotional offers
Cons:
- ✗ Higher rates than banks (9-18% APR)
- ✗ 0% offers charge retroactive interest if not paid in full
- ✗ Less flexibility, prepayment penalties
- ✗ May include dealer markup
Best for: Last resort if you can't qualify elsewhere (but shop rates first!)
Credit Cards
Rates: 18-29% APR
Terms: Revolving credit, minimum payments.
Pros:
- ✓ Immediate access
- ✓ Rewards/points on some cards
- ✓ Some 0% intro APR offers (12-21 months)
Cons:
- ✗ Extremely high APR (18-29%)
- ✗ Easy to carry balance long-term
- ✗ Hurts credit utilization
- ✗ Most expensive option
Only use if: You have 0% intro APR and can pay off within promo period
The Real Cost: Comparing Options
A few percentage points of APR might not sound like much, but on a $15,000 roof paid over 5 years, it's thousands of dollars. Here's the actual math.
Scenario: $15,000 Roof Replacement
| Option | APR | Term | Monthly | Total Cost |
|---|---|---|---|---|
| Cash | 0% | — | — | $15,000 |
| Credit Union Loan | 6% | 5 yrs | $290 | $17,400 (+$2,400) |
| HELOC | 7.5% | 5 yrs | $300 | $18,000 (+$3,000) |
| Personal Loan | 8% | 5 yrs | $304 | $18,240 (+$3,240) |
| Contractor Financing | 12% | 5 yrs | $334 | $20,040 (+$5,040) |
| Contractor Financing | 14% | 5 yrs | $349 | $20,940 (+$5,940) |
| Credit Card | 22% | 5 yrs | $416 | $24,960 (+$9,960) |
That 6% difference between a credit union loan (6% APR) and contractor financing (12% APR) costs you $2,640 over 5 years. Between credit union and credit card? $7,560. Always shop rates. For detailed cost breakdowns, see our Cost Guide.
Financing Traps to Avoid
Some financing offers sound great until you read the fine print. Here's what to watch for.
0% Financing (Same-as-Cash)
Many contractors offer "12-18 months same-as-cash" or "0% APR." The catch: if you don't pay off the full balance by the deadline, you're charged retroactive interest from day one at 18-24% APR. On a $15,000 roof unpaid after 18 months, you suddenly owe $2,700+ in back interest.
How to use it safely: Only accept 0% offers if you're absolutely certain you can pay off the full amount within the promo period. Set calendar reminders. Pay early if possible. Budget conservatively—unexpected expenses can derail payment plans.
Large Down Payments
Some contractors require 50%+ down payments to "secure materials." This is a red flag. Reputable contractors have supplier credit—they don't need your money upfront. If the contractor goes under or does shoddy work, your deposit is gone. Never pay more than 10% down or $1,000, whichever is less.
Prepayment Penalties
Some contractor financing agreements charge penalties if you pay off the loan early (3-5% of remaining balance). This locks you into paying full interest even if you get a windfall. Always ask about prepayment penalties before signing. Quality lenders don't penalize early payoff.
Dealer Markup
Contractors partnering with finance companies sometimes receive a kickback (dealer markup) for steering you toward their lender. This markup is baked into your APR—you're paying extra so the contractor gets a commission. Shop your own financing to avoid this. For timeline planning, see our Timeline Guide.
Financing FAQ
Ready to Finance Your New Roof?
Get quotes from contractors and compare total costs with different financing options.