Auto In House Financing Sounds Good, So Why Aren’t Deals Closing?
RV and boat dealerships, like auto dealerships, have similar needs when it comes to offering financing to their customers. Many choose to operate with an in-house financing department based on the idea that keeping things internal gives more control, therefore it makes more money, moves more units, and ensures customers are given the best rates. This idea conflicts with the fact that a team of skilled outsourced financing and insurance specialists, like those at Finance Solution, are better equipped for this purpose.
In House Financing Auto Dealerships
First things first: yes, an in-house financing department that finances loans directly could theoretically offer rates that are below the wider market. A dealership could try to boost sales by offering an RV just above cost (it’s not unheard of to sell vehicles below cost to meet quotas) and then offer absurdly low financing terms—something like 0% for 72 months.
If you’re the lucky customer who stumbles on this particular deal, of course, you’re going to be happy with the purchase. In fact, due to the COVID-19 pandemic, vehicle dealerships are using tactics like this to ride out the storm.
However, no money is being made and these practices are, by definition, unsustainable. Instead, an outsourced solution like Finance Solution allows you to still offer competitive rates to your customers, ensure all proper insurance coverage is attained and all desired warranties are procured, all while still making money and leveraging the high demand for RVs in today’s economy.
And the best part? We only make money when you’re making money. So, there is no sacrifice to be made.
Directly Financing With a Dealership
One of the pitfalls many customers face when being sucked in by dealerships who offer direct financing is that the comprehensive service and product offering is usually missing. Prospective boat, camper, and RV buyers are right to be wary of a dealership offering financing directly from their own coffers.
In the customer’s mind, the alternative is working directly with a third party lender to secure financing on their own. Not only does this process often result in disappointment and unapproved loan applications, but the loans that are approved often come with unfavorable terms. In this situation, it’s not like the dealership is seeing any benefit, either. Sure, a unit moved off of the lot, but how much money was really made?
How Does In House Financing Work?
Dealerships who go with this strategy are often in a bind as well. Either they invest large sums of money into the staff required to meet customer demands like procuring insurance and warranties, or they choose to be cheap yet offload the work to the consumer.
With an outsourced F&I provider at the helm, dealerships can be confident that their customers are getting everything they need. Ideally, they’ll complete the transaction excited and ready for their adventure, not just complaining about how difficult the process was.
Instead of offering direct financing or leaving it up to customers and third-party vendors, choose the third path: a partnership with a proven provider like Finance Solution.
If Finance Solution has proven one thing in our history supporting dealerships’ F&I needs, it’s that we can demonstrate a 20% higher rate of getting loan applications approved versus other providers. But how is it possible to know that, exactly? Surely that number is just increased volume working with a number of dealerships.
That figure refers to one of the first things we do when developing a relationship with a new dealer. We’ll ask you for previous loan applications that were rejected for one reason or another. Low credit scores, insufficient debt/income ratios, or other factors that go into making the determination. With that information in hand, we will systematically demonstrate how 20% of those disapprovals could have been sold RVs if only Finance Solution had been handling the F&I.
This translates into 20% more turnover of the units on your lot, better sales numbers for your team, better profit margins. Getting started is simple. Give us a call today and we’ll demonstrate exactly how Finance Solution can transform your dealership.