Profit X - Powersports Business Las Vegas Pt.5

12 Ways To Improve Lending Approval Rates

Opportunity...that's how I saw it. Where else would you have the opportunity to get 5 key players of financing in one panel to answer some questions. They were set up to discuss what the retail climate the powersports industry is in now, and what can be done to improve a dealership's approval percentage rate. But I saw it as an opportunity to find out if any had plans to make any real changes for the dealers. Here is who was on this panel, what they said, and some of the questions that were asked during this session.

Bob Byrne, Sheffield Financial
Tom Collins, Freedom Financial
Amy Kneeland, GE Money
Jeff Williams, American Honda Financial
Kevin Walsh, HSBC Card and Retail Services

Retail Climate for the Powersports industry. To summarize what was said into one word, it would be...Stability. The panel acknowledged the dramatic changes that happened to retail finance beginning in 2007/08 and that rapid changes had to be made at that time in order to remain a player in this industry. It affected a lot of dealers who relied on the deep purchases being made, especially the dealers who got used to buying parameters these lenders had set. I wrote a blog in February of this year called "Powersports Financing" and most of what they said on this day mirrored my thoughts put in that blog. Read it if you get a chance, I was spot on. Bottom line is during the rapid change it was a time of survival. They are past that now and are in the stability stage. They are making sure the same bad decisions that were being made in the past are not being made now. A lot of emphasis was made on accountability to the dealerships to get more from the customer like down payments, and income verification. Relationships should be built from the underwriters on up.

All of that led into the 12 ways to help improve retail lending approval rates. Each person on the panel had about 3 bullet points to discuss, by my count that would give us 15 ways, but I'm pretty sure that each lender had the same 3. Down Payment, Proof of Income, and ID verification. There might have been a couple that talked about putting the truth on every application, and I have no idea what they were talking about there. It got to the point it sounded like they were all repeating themselves. Questions came up shortly after and here are some of what was asked.

- Any first time buyer programs?

Tom from Freedom answered, "We have a first time buyer program, it's called a co signer"... Bob from Sheffield said there company has a Type S program for Suzuki dealers and Kawasaki has followed suit with a similar Type K program. In which I replied that it has been quite unsuccessful for the most part and that the parameters for that program have not been disclosed fully, by the underwriters... All lenders say they have no plans for a first time buyer program in the future.

- The Lenders have made a big push for dealers to seek out local credit unions and build a relationship with them, which we have had a good deal of success doing. Are there any plans to come out with an installment program similar to HSBC Rev Charger or GE's Funancing?

NO! from all lenders, except Amy, who said that Polaris/GE is currently working on a pilot program that may be introduced down the line.

- Tom from Freedom brought up mortgages being possibly overlooked under the right circumstances. Given the current state of home owners, do ALL the lenders have an oversight plan as more and more foreclosures begin to show up on the bureaus?

No, not at this time from all lenders, except Freedom.

- The Watercraft Manufacturers are pushing for dealers to increase there inventory for 2011, a big draw back is the lack of long term financing available to consumers. Do any lenders plan on having any longer terms available for watercraft?

NO! from all lenders.

- Given the Red Flags Rule becoming active in January 2011, what are some of the guidelines the dealers/lenders have to face before then.

This was funny, no one on the panel wanted to take this question. Kevin did his best but missed it by a mile. I think this is the reason Peter Jones opened with it in his session the following day. Given the fact the Red Flags Rule is in place now, but no enforcement will be made until January 1, 2011, I think every dealer needs to do their homework. You're still liable for the Red Flags Rule dating back to November 1, 2008. By coincidence I had already scheduled a webinar for the Red Flags Rule on October 20th and I have some good information to share, which I will when all parts are finished.

In conclusion to this session, I would say that the lenders did not provide us with any new information. If you were worried about the stability of any of these company's, don't be. They are past the survival stage, on stable grounds and don't have any plans to expose themselves to any risks at this time. Sounds to me like it would be a good time for a new finance company to come in aggressively and sweep the leaned back chairs out from underneath them.

That's "My Take"