Nov. 8, 2010 – Approval comes easier with effort
November 8, 2010
Filed under Features
LAS?VEGAS?— Financing is available for powersports customers, but approval can be hard to come by as many consumers have been hit with a backlog of debt during the recession. However, if dealers are willing to work for the financing, it’s more likely to come through, said members of a retail lending panel held during Profit Xcelerator, Powersports Business’ dealer education conference & expo.
The first thing dealers should focus on with any credit application is to make sure all forms are accurate and complete. Dealers also should share as much information as possible to their lenders.
“Frankly, if we do verify income, and it’s off, that’s most likely going to be a decline,” said Jeff Williams, a member of the “12 Ways to Improve Retail Lending Approval Rates” panel and senior manager of sales and marketing for American Honda Finance Corp.
With correct information, loans are more likely to be approved. The key to their approval often lies with the relationship each dealership has with their lenders.
“Dealers that have good dealer performance … we’re willing to take a risk on them,” said Tom Collins, a panel member and executive vice president and managing director of FreedomRoad Financial.
If a loan is turned down and dealers have a good relationship with their lender, there is a chance that decision could be reversed. Kevin Walsh, senior vice president of client development at HSBC, said 90 percent of “Call HSBC” application referrals, which include issues such as address and income discrepancies and fraud alerts, are approved when a dealer calls in and provides HSBC with clarifying information. However 25 percent of dealers never call.
“I’m always amazed that once a dealer gets a turndown that they’re done,” Williams said.
When a credible dealer calls the lender, gives the full financial story about the customer and vouches for the customer, a deal is more likely to be made.
“We don’t know what’s going on in Utah. You’re going to tell us what’s going on in Utah,” Williams said as an example.
When more information is supplied, whether in the application or over the phone, lenders can take more into account.
“We’re determining as much information as possible with what you give us and the credit score,” said Bob Byrne, vice president of manufacturer sales at Sheffield Financial.
If after a phone call the loan is still unapproved, dealers can shop around.
“I think it’s very important for you as a dealer to have multiple lenders,” said Amy Kneeland of GE Money. “Don’t stop at the first ‘no’ you get; go to another bank for approval.”
One of the factors that can determine whether a customer will be approved is the size of the down payment.
“Down payment is a big game changer for us. Cash down payments impress us,” Collins said.
He and Kneeland also suggest salespeople sell to the customer’s budget.
“Set your customer’s expectations. Bring them down to a bike that fits their income level,” Collins said.
“Because you put him in a good position, he’s going to come back into your store,” Kneeland added.
But dealers also have to remember not everyone is going to be approved.
“You just can’t get a bad deal done if it’s a bad deal,” Byrne said.
The lenders suggest dealers leave the financing decisions up to the bank rather than try to determine eligibility themselves.
“Give the bank a shot,” Walsh said. “Don’t assume a customer will be turned down.” PSB