Financing Deductible Vs Funding Deductible Over Time – What Is The Difference?

Financing and funding a deductible, what’s my best option?

Every company needs capital to run. Every excursion needs an injection of money to grow. Every person requires cash to make their projects materialize. There are different ways to collect this capital. When it comes to insurance deductibles, sometimes that capital might be overwhelming. If you’re a homeowner you might find that you’re incapable of hiring a contractor to start on an insured repair or renovation on account that the state first demands that you pay the deductible.

You suddenly discover that you have two possibilities available to meet this challenge head-on. You can either fund your deductible or you can finance your deductible. To the average person, both options look the same. Isn’t funding the same as financing?  

We’re going to tell you the key difference and also explain why of the two options available, funding is the most beneficial, not only for you but for your contractor.

Funding Vs Financing

In the financial world, the terms funding and financing have become interchangeable. Due to a series of oversights and reductionist writing on blogs, both terms now serve as synonyms to one another. But, the organizations that manage the economy and the bulk of the financial minutia, to the ones that settle contracts and make your money run from point A to B, funding, and financing are two different things. 

Funding is an amount of money provided by either a private organization or a government based on a unique agreement between the parties involved. There are contractual requirements but said obligations or provisions are tailor-made to each situation.

Meanwhile, financing is the capital/sum of money lent by a financial institution, like a bank or a lending agency, with an obligation for repayment. This agreement is based on the standards implemented by the institution and it is generally unchanging from one contract to the other. 

When it comes to deductibles the difference lies primarily in the way a financial institution’s agreement is set. They have to respond to investors, not the homeowners or the contractors. Their obligations are with venture capitalists, boards, and the interest of the institution. This, in turn, translates to a draconian, and iron-clad contract, based on mathematical equations conveniently created to help their profit margins. They also have to take into account governmental oversight and most contracts or loans are also at the mercy of legislation and the financial market.

The Benefits of Funding over Financing in Deductibles for Homeowners.  

Funding to pay your deductible is a new trend. It’s a fairly vogue tendency that is only now becoming widespread thanks to appearing platforms and systems. This current movement is partly instigated by the fact that homeowners, up until a couple of years, had no other choice but to sign up with banks if they couldn’t afford their deductible. In many cases having to pay inordinate rates for money, they simply didn’t have and modern State legislation required them to obtain to process their insurance policies. 

For homeowners, funding became a godsend and for contractors – who were losing possible clients because that very legislation blocked them from getting work – it was a boon. 

No credit check, no qualifying terms, no minimum

Homeowners were no longer being scrutinized by the bank or money lenders. They could apply for a funding solution with full knowledge of the fact that they wouldn’t be rejected.

No fluctuating interest

The main problem with financing is that interest rates seesaw. They are very inconsistent and that rise and fall often hurt your loan and its bottom line. With funding, the interest is set at a continuous, persistent rate. What you pay today in interest will endure until you finish the contract and the endowment is paid back.

No financing charge

No hidden charges. A homeowner knows exactly what they will pay at the end of every month. There are no surprises in store, unlike with a loan.

Fees remain the same

At the beginning of a contract, the homeowner and the contractor come together and agree on a processing fee and a set monthly service fee. This cost and charge for the service are personalized and it is one the homeowner assents to through careful negotiation. 

Pay it Out

One of the great things about funding is that you can cash out and pay your complete credit anytime during the duration of the contract. If a homeowner has had a windfall and decides to pay off their fund barely a month into the pact they can do so with ease. If you want to discover all the benefits of funding deductibles you need to contact 

Why funding is great for contractors and homeowners

Funding is an excellent choice for handling your deductible. For a homeowner it allows them to take a more active role in their financial challenges and come up with a personalized arrangement that adheres to their needs. It allows them to plan for the future knowing full well the sort of economic responsibilities they have to meet, secure in the knowledge that they won’t be caught off guard by a surprise. 

For a contractor, meanwhile, funding allows them to take on jobs they would normally have to decline on account of homeowners that can’t pay their deductible. It also allows them to set their interest rates and get extra revenue from the payout of said rates. 

There are dozens of more reasons why funding – including the fact that it helps to build credit – is a win-win situation for both homeowners as well as contractors.


TBN Editor

Time Business News Editor Team