IT'S NO SURPRISE that the biggest challenge facing our industry is getting financing for our customers. This has been a factor for the last several years, but this year so far has been the worst. Many lenders are dropping their financing, and some financing companies are requiring more of a down payment and higher credit scores.
Financing is crucial to your dealership's future. Being able to finance a customer sells the unit, and increases the chances that the customer will return to your store for a trade-in. Plus, customers who get heavily financed will most likely tell their friends about you. Word of mouth is still the most proven way of promoting your store. So this is key.
ANOTHER TOOL FOR YOUR TOOLBOX
HelpMeRide Inc., a Colorado-based financing company, focused on getting subprime financing for powersports dealerships. Period. Its only goal is to get your turndowns approved. The company used to finance only new and used large-displacement V-twins. Now it works with dirt, ATV, snowmobile and personal watercraft customers.
Perhaps HelpMeRide's main benefit is that it helps bring customers back for the trade-in or another new unit, usually within 36 to 48 months. The company does charge a fee for each deal, and the fee is taken out of the dealer's gross profit at the time of funding. There are no surprises, and the dealer knows exactly what the gross will be. Busy dealers will appreciate that the whole process is handled by the company.
Dealers usually make $1,000 to $2,000 per deal. This includes both back- and front-end profits, and some dealers make more. The key to such profits is the process. Dealers know to do each deal in the same way, without shortcuts. I have personally seen this work. HelpMeRide tells dealers that they must submit each and every turned-down financing application within 24 hours — no exceptions. This helps to prevent customers from going down the road, totally giving up on financing the powersports toy of their dreams.
Accuracy is key on all applications. There is a lack of professionalism when dealers have to call the customer back for more information. An F&I department must relay to customers that the dealership has a special outside source to help them get financing, whether they are first-time buyers, formerly bankrupt buyers, or just credit-challenged buyers.
I highly suggest to HelpMeRide dealers that they advertise this service on their Web site, on all forms of media and, of course, in their newsletter. I say to them: Remind your customers that your dealership is there to help them get financed. Be sincere; this is a very emotional and somewhat embarrassing situation for them. Your goal is to serve them.
Once an application is received, the potential customer's information goes into a database under the dealership's name. This ensures that applicants are potential customers forever, unless they move away from the area. HelpMeRide generates a bimonthly newsletter for these people. What's more, it accepts payments from them until there's enough for a down payment. Again, its goal is to assist people in financing to buy a unit from a particular store. We all know that credit scores don't change overnight, and the subprime credit status will not change to prime status even after several years. The HelpMeRide folks say they're always in touch with these potential customers for the dealership's benefit. Their stated goal is to help people for "as long as it takes."
The short and long of this program is that it acts as one consistent benefit for a dealership, which will sell more units each month.
Now for some statistics: On average HelpMeRide approves 60 to 70 percent of turndowns. The company tells me that with most of its dealerships (large and small), it processes 10 to 20 deals per month. Again, these are 10 to 20 deliveries that wouldn't have happened otherwise. Deals are constructed with profits for the dealership both front and back. All is constructed so prior to finalizing the deal, dealers see the exact profit on the deal. No surprises. There is no recourse back to the dealers.
HelpMeRide — or a similar service — is not a total cure, but it could be a significant asset to your customers and to your dealership.
Other Financing Options
The following institutions also offer subprime financing for powersports dealerships. Contact them for more information.
Merrick Bank, 888-545-3888. www.merrickbank.com
Medallion Bank, 866-688-6983. www.medallionbank.com
Western Funding Inc., www.westernfundinginc.com. Visit the Web site for phone number of location nearest you.
Steve Zarwell is a dealer consultant and a member of the Dealernews editorial advisory board. Contact him via firstname.lastname@example.org.