OK, it's Monday Morning. I have no less then 12 applications in front of me that need to be, either, reworked or submitted to a high risk lender. All 12 applications are "buyers" that, "if qualify", will buy. One applicant wants to buy two units and keep his payments under $200 a month. The others, well, want to buy, has down payments to make it happen and are eager and ready to pick up their units as soon as they are approved. So after a dismal weekend, I have 13 total units ready to roll. Sounds like a great Monday Morning.
Here we are 2 1/2 hours into the morning and I have just received my final turn down. 13 units, down to 0. Not completely unusual, we've all seen it before, and with today's credit history, it won't be the last time we'll see Monday's like this. Last blog I discussed the need to get back on a personal level with our lenders, work on getting customers to come up with a down payment, and re-educating our customers. Going into the week after that blog, I did just that. I approached every customer with the understanding that there is a want to buy, but the hesitation may be an unwillingness to discuss their bad credit. After following all the steps of the sale I overcame the hesitation and the result was 12 applications of bad credit.
Now, whats my point. As I wrote the first two paragrahs of this blog I stopped and and asked my self the same thing. "What is my Point". After reading it over I realized that I was venting my frustrations, and it worked, I'm no longer frustrated. The point here is not that my efforts were stopped short of a sale, because I couldn't get any approvals, but the fact that there are customers walking through the door, eager and ready to buy, and with the comprehension that the days of $39 a month payments, 0 money out of pocket, are a thing of the past. Re-educating customers is going to be a long process it's definetly not going to happen overnight. It will probably take as long as it takes for the customers to start rebuilding their credit well enough to start buying again. It's something we shouldn't lose focus on. Re-educating the lenders probably won't take as long, but without applicants like these they won't know there are buyers out there, and dealers working hard to try and make it happen.
Monday, February 22, 2010
Saturday, February 13, 2010
Powersports Financing
I've heard it all from owners, salesmen, consumers, and consumer wannabes on "if the lender would just buy more we would sell (buy) more". While this statement is true, it usually insinuates that the finance company has turn down someone who should have been approved.
It's my experience, as of late, that these finance companies want to lend to consumers and allow dealers to "sell more" but they don't want (or can't) fall into the same mistakes made in years past. For example, in years past we would have an 18 year old kid come in with 2 pieces of credit with a $1000 high line and less then 1 year on the bureau but a score over 700. Well certain lending companies, in less then 2 mins, would approve this kid with a $15K credit line and we could send him on his way with a new machine or 2 in less then an hour.
In the beginning, we would joke on how ridiculously lucky we just got and that we need take advantage of this approval, give him what he wants and tell him how ridiculously lucky he just got and make sure you make your payments on time and don't mess this up etc, etc. Then it became such commonplace in this business that every one with a heartbeat and a score over 580 was going to get approved for something. We stopped telling people that we just got a gift of an approval and we stopped telling them to make sure you make your payments etc, etc.
If you are one of the unlucky people who just got in this powersports business in the last 5 years, you're one who believed that customers were never ending and approvals are second nature. If you've been in this business longer then that, like me, you got so use to stuffing your wallet with money and lost sight of the gifts of approvals we were getting. We even led consumers to believe that approvals were no problem, just fill out this application and we'll have you in the office signing paperwork in just a few minutes.
I don't know, entirely, how the inner workings of a finance company operates, but I do know some decision making people made some wrong decisions by allowing these types of gifts to continue. Now, in order to survive today and in the future, these finance companies have to make right decisions, and that includes turning down someone who should be turned down. Looking harder at applications that score alone can't define.
Now this doesn't mean, giving in to the finance company and allow there decision to be final. Let's get back to the basics, understand the credit bureau of our customers. Find if we must a middle ground with the lender, and start working the consumer more for down payments, proof of income etc, etc. Use what we know to be true and start building that relationship up with lenders again like we did in the past. Lenders want to lend, they want to lend to consumers who can prove they can pay, they want to lend to dealers who are looking out for the best interest of the consumer, dealer, and lender.
That's My Take!
Lenders used (AHFC, HSBC, GE (Funancing), Sheffield, MB, BMW, YDS, and countless others that either don't finance powersports any longer or have gone by the way side)
It's my experience, as of late, that these finance companies want to lend to consumers and allow dealers to "sell more" but they don't want (or can't) fall into the same mistakes made in years past. For example, in years past we would have an 18 year old kid come in with 2 pieces of credit with a $1000 high line and less then 1 year on the bureau but a score over 700. Well certain lending companies, in less then 2 mins, would approve this kid with a $15K credit line and we could send him on his way with a new machine or 2 in less then an hour.
In the beginning, we would joke on how ridiculously lucky we just got and that we need take advantage of this approval, give him what he wants and tell him how ridiculously lucky he just got and make sure you make your payments on time and don't mess this up etc, etc. Then it became such commonplace in this business that every one with a heartbeat and a score over 580 was going to get approved for something. We stopped telling people that we just got a gift of an approval and we stopped telling them to make sure you make your payments etc, etc.
If you are one of the unlucky people who just got in this powersports business in the last 5 years, you're one who believed that customers were never ending and approvals are second nature. If you've been in this business longer then that, like me, you got so use to stuffing your wallet with money and lost sight of the gifts of approvals we were getting. We even led consumers to believe that approvals were no problem, just fill out this application and we'll have you in the office signing paperwork in just a few minutes.
I don't know, entirely, how the inner workings of a finance company operates, but I do know some decision making people made some wrong decisions by allowing these types of gifts to continue. Now, in order to survive today and in the future, these finance companies have to make right decisions, and that includes turning down someone who should be turned down. Looking harder at applications that score alone can't define.
Now this doesn't mean, giving in to the finance company and allow there decision to be final. Let's get back to the basics, understand the credit bureau of our customers. Find if we must a middle ground with the lender, and start working the consumer more for down payments, proof of income etc, etc. Use what we know to be true and start building that relationship up with lenders again like we did in the past. Lenders want to lend, they want to lend to consumers who can prove they can pay, they want to lend to dealers who are looking out for the best interest of the consumer, dealer, and lender.
That's My Take!
Lenders used (AHFC, HSBC, GE (Funancing), Sheffield, MB, BMW, YDS, and countless others that either don't finance powersports any longer or have gone by the way side)
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