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In the past, getting credit for customers was an art. Now, many of us seem to close our eyes and give it a shot. We accept the decision of our finance house and give up. But there is a lot more to finance and a lot of ways to make money.
I am stunned to see that many dealers do not have financing for their customers. “Everyone pays cash,” they proudly say. Of course everyone pays cash if you do not have financing. The question is, what happens to all of the people who needed financing but did not want to tell you about it? They went to your competitor. Since the demo is based
on dollars per month savings, in our industry it only makes sense to talk about the client’s investment in dollars per month, too. Financing is the key to success in our industry, so do not leave home without it.
You need not one but several sources of financing. Why? Because things change. The company that takes water equipment paper today, may stop next year. You always should have at least one or two sources and be courting another.
In addition, set up local sources. Start by going through your regional Yellow Pages under “loans.” You will be surprised how many small regional loan companies will work with you. Also, try every local bank. Take a banker to lunch and see if he is interested in paper. Finally, find a company that will issue a credit card. When you need financing for a customer, just apply for a credit card and put your system on it.
In addition, consider buy-here-pay-here for credit challenged customers. Take in used units or buy them for $100 to $200. You might sell a used system for $700 with $200 down and post dated checks. This allows you to turn a nonsale into profit and keep a salesperson and customer happy. It also allows you to get deals your competitors have to
walk away from.
All lenders rate customers by a point system. Join a credit bureau or credit-checking service and get the clients’ permission to check his credit and pull a credit report before you send it to a lending company. Often you will find clients just 50 points short of the score they need. You can get pretty good at raising their score 50 to 100 points by protesting bad reports. Never send in applications blind to your credit sources.
Many dealers are call the application in, and in less than five minutes they can receive an approval or rejection. That is great if it is an approval,
but if it is a rejection, you have
lost the sale. I suggest that you
take the credit application in the
home, read it for completeness
and say, “This looks good, you
will not have any trouble with financing.” This way, it is a done
deal and off the customers’ minds.
If it is rejected, you have a day or
two to try other sources.
There is a lot more to financing than getting one source and faxing all your applications in. A dealer who sells
500 systems per year probably has
100 rejected due to credit. Those
100 systems probably represent $300,000 in sales that could be
made with a little effort. If you have someone skilled at saving finance rejections and cold feet cancellations, they will pay for their cost many