Quiet On The Finance Front?

[NOACROSS 414]

Just had Motonovo ring looking for feedback or ideas due to downturn in proposals/level of business. I've never had this from them before.

We've definitely seen a big reduction in finance business the last year. Are others the same?

Annoyingly, I should think half of our proposals have blown the computer up, and quite a few couldn't be helped by the sub-prime companies.

[Nick M.K. 574]

My figures are good, up on last year, 59% acceptance rate, almost 90% take-up rate. 

approx 1/3 of my sales are on finance and I am offering £300 deposit contribution from this month until the end of Jan to hopefully help and convert some cash buyers. 

Some stock definitely attracts the finance buyers: prestige models, black or white, high spec, older than 4-5 years, even with higher than average miles. Annoyingly, every time I am certain a car will sell on finance it goes to a cash buyer 

[NOACROSS 414]

Yeah - your stock is mostly newer/different than mine and I think this is a big reason as you say.

Was just interesting to hear it from Motonovo that it has been quiet.

[whitestone679231 113]

our finance take up has dropped off a cliff, except for dodge pots via cf247, I think it is because there is so much cheap money about for proper people, after saying that I am going on a do tonight with close finance reps so no doubt I will get grief as to why no real business done for a while.....

[James01 21]

Sourced a year old c class coupe for a friend of mine recently. £25,000 car and borrowed the lot from a supermarket lender. Is paying back a little over £26,000 over 5 years.

No wonder the finance companies can't compete! 

[Nick M.K. 574]

2 minutes ago, James01 said:

£25,000 car and borrowed the lot from a supermarket lender

Anyone that can get approval for that amount by a mainstream lender shouldn't really consider car finance. 

[David Ayers 171]

I just sell bread and butter stuff. Sub £10,000. I would say we are getting more finance. Of the cash ones several are borrowing from the bank of Mun and Dad.

October. Sold 18 of which 11 cash, 5 Prime finance, 2 Zuto

November. Sold 6 of which 4 cash, 1 prime Finance.1 CF247

Edited November 8, 2018 by David Ayers

[whitestone679231 113]

7 minutes ago, David Ayers said:

I just sell bread and butter stuff. Sub £10,000. I would say we are getting more finance. Of the cash ones several are borrowing from the bank of Mun and Dad.

October. Sold 18 of which 11 cash, 5 Prime finance, 2 Zuto

November. Sold 5 of which 3 cash, 1 prime Finance.1 CF247

Out of interest who pays what to CF247??? I am currently £125 a car (up from original £100)

[Tadams 29]

10 minutes ago, whitestone679231 said:

Out of interest who pays what to CF247??? I am currently £125 a car (up from original £100)

We take 24/7 enquirers and send them to Zuto to broker and then they pay us a commission instead of us paying 24/7  not sure they've twigged just yet lol

[Rory RSC 596]

Doing more finance than ever this year largely due to marketing, pushing deals that look attractive and being competitive on rate whilst still earning. Stock profile also.

 Makes a big difference monthly when the cheque rolls in. I have put a lot of effort into making it work with a lot of trial and error but seems to be good for now.

 

CF247 don't pay them anything. Sacked them off following them repeatedly sending us invoices for cars customers had seen on Autotrader / facebook etc and despite us and the customer telling them this they were not interested.

[NOACROSS 414]

Had a 24/7 customer yesterday on a Chevrolet Cruze.  Their lender said they couldn't hep her on that car due to price of the parts!  It's ony an Astra in a dress.

Anyway, to be fair to 24/7, they got her on with another non-mental lender today.

I like Nick's idea of a deposit contribution.  Might have to steal that one.  Rory/Nick- where do you push the finance?  Just on the website or Bookface for example?

[trade vet 702]

Just received our ‘ chucky licence’,it has taken about 6 weeks since applying.So we are now getting brokers reps come in and phone calls from others.I am presently wading through the small print in a brokers contract and the potential liability for void deals is far reaching.No mention of commission yet.I am not sure how anybody can be doing sub prime when among the CRA stuff and other things it also appears you could be made liable if the hirer is ‘considered’ to be vulnerable or of a particular mental state.One other broker has been on wanting to sign us up saying we have to pay them £150 per deal as their intro and acceptance fee.They have said,just add the £150 to the finance balance ! the way I read FCA Regs That is illegal and will probably guarantee to bounce back as a void deal when the hirer defaults.The small print is ambiguous,this particular agreement is a minefield....I think I will stick to prime lenders.

[NOACROSS 414]

We've never had any more issues with sub-prime T.V. than prime.  And nothing at all to speak of really over the years (20 odd plus) so I personally would just get on with it if it brings you deals.  Especially as you will do the prep and handover/pdi docs properly. 

Just look on it as another string to the bow.  A bit like come-backs: it's very rare and you just need to keep 'making hay' I say.

There was one 'chucky' as you call it a few months ago who tried to get clever, but the paperwork (and Advantage to be fair) nipped that one right in the bud quickly and nothing came of it.

One Prime customer decided she didn't want the car and simply dumped it at the site and left.  Long story short, the car got repossessed in the end and, undoubtedly her credit profile took a giant nosedive.  Anyway, again there was no pain or punishment to us other than the commission claw-back and we charged for storage anyway

I did have a couple of other commission claw-backs over the years (when the punter very sensibly decided to pay the loan back early-bastard ;0), but it's super-rare in my experience and if you use Blue for example, this wouldn't happen.*

I hear Close are good, but I haven't used them for years, since they retired off the lovely old bloke called John, who used to come round with the chequebook, do the paperwork and pay you.  Would also give you a bottle of scotch each Xmas and give us fabulous personal deals if we wanted to smoke around in something heavy for a few months.  Good old days... 

We now use Motonovo first as they are very good and their system is simple and payouts are quick- then Mallard or Zebra as they do the hard work.   After that, First Response for the proper Sub-prime. 

How's the new place going?  Selling frenzy yet?  Did you re-photo yet/get the videos up and running?

[David Ayers 171]

Hopefully Blue will do their I-Pad promotion again this Christmas. Haven't heard anything yet

Nic. How does your contribution work if the customer pays the finance off within 14 days.

36 minutes ago, trade vet said:

Just received our ‘ chucky licence’,it has taken about 6 weeks since applying.So we are now getting brokers reps come in and phone calls from others.I am presently wading through the small print in a brokers contract and the potential liability for void deals is far reaching.No mention of commission yet.I am not sure how anybody can be doing sub prime when among the CRA stuff and other things it also appears you could be made liable if the hirer is ‘considered’ to be vulnerable or of a particular mental state.One other broker has been on wanting to sign us up saying we have to pay them £150 per deal as their intro and acceptance fee.They have said,just add the £150 to the finance balance ! the way I read FCA Regs That is illegal and will probably guarantee to bounce back as a void deal when the hirer defaults.The small print is ambiguous,this particular agreement is a minefield....I think I will stick to prime lenders.

Be interesting to know what rates and comission you are offered.

[trade vet 702]

43 minutes ago, NOACROSS said:

We've never had any more issues with sub-prime T.V. than prime.  And nothing at all to speak of really over the years (20 odd plus) so I personally would just get on with it if it brings you deals.  Especially as you will do the prep and handover/pdi docs properly. 

Just look on it as another string to the bow.  A bit like come-backs: it's very rare and you just need to keep 'making hay' I say.

There was one 'chucky' as you call it a few months ago who tried to get clever, but the paperwork (and Advantage to be fair) nipped that one right in the bud quickly and nothing came of it.

One Prime customer decided she didn't want the car and simply dumped it at the site and left.  Long story short, the car got repossessed in the end and, undoubtedly her credit profile took a giant nosedive.  Anyway, again there was no pain or punishment to us other than the commission claw-back and we charged for storage anyway

I did have a couple of other commission claw-backs over the years (when the punter very sensibly decided to pay the loan back early-bastard ;0), but it's super-rare in my experience and if you use Blue for example, this wouldn't happen.*

I hear Close are good, but I haven't used them for years, since they retired off the lovely old bloke called John, who used to come round with the chequebook, do the paperwork and pay you.  Would also give you a bottle of scotch each Xmas and give us fabulous personal deals if we wanted to smoke around in something heavy for a few months.  Good old days... 

We now use Motonovo first as they are very good and their system is simple and payouts are quick- then Mallard or Zebra as they do the hard work.   After that, First Response for the proper Sub-prime. 

How's the new place going?  Selling frenzy yet?  Did you re-photo yet/get the videos up and running?

Hi Noacross

Thank you,because I have been in this job forever and stitched up many times, I tend to focus on the potential downside too much.I am used to the normal clawbacks for early settlements and defaults etc.on prime finance which there were few.However it is about 7 years since I was on the front line and things have changed.I have been used to dealing with Black Horse,Santander and Close in the past and if they are interested they should show up and I will see how their contracts look.I don’t think we can do sub prime as it appears you have to be a qualified social worker to offer it !

Regarding business,still slow,sold a few,bought a few at the door,had problems with the website although it has been up for only  3 weeks.One thing,we have a busy main road location but we are getting very few ‘walk ins’.We have not yet established what we should be selling.It might turn out to be an over 10 or an under 5 grand pitch or if it is a sub prime pitch then I will be out !

[NOACROSS 414]

Ha. Good stuff. It’ll happen. It’s not a local game anymore though really.  

Honest, sub-prime is no more difficult than prime. The customers are often nicer/more grateful and less drama with their expectations.  Takes no longer to serve them than a prime punter. 

My site is on a main road corner location on crossroads. Walk-ins are few and far between. Has been the same for the last two or three years.  All the looking is done online, and mostly we know when people are coming nowadays. 

[Nick M.K. 574]

2 hours ago, David Ayers said:

Nic. How does your contribution work if the customer pays the finance off within 14 days.

It does leave me out of pocket by about £240 as I won't get a penny in finance commission (my clawback is 6 months actually) but if someone is dead set on receiving a bit of discount they can probably negotiate it on my desk rather than go through the hoops of getting car finance, then cancelling. The £60 difference is VAT saving. 

 

"HMRC has explained the treatment of dealer deposit contributions (DDCs) when motor dealers contribute towards the deposit payable to the finance company, leaving the customer to pay a reduced amount. It considers these arrangements are a discount on the headline price charged by the dealer, with VAT due on the discounted amount charged, not on the full asking price"

The HMRC brief on the clarification gives an example: ‘The headline price of a car is stated as £28,000, this is shown as being funded by £20,000 finance, a deposit of £6,000 from the customer and a DDC of £2,000. HMRC views the selling price from which VAT is due as £26,000 (£28,000 headline price less the £2,000 discount/contribution from the dealer).’

Businesses that have accounted for VAT on the headline price should correct the position either by making a claim for overpaid output tax, or by amending their VAT return."

 

Edited November 8, 2018 by Nick M.K.

[trade vet 702]

35 minutes ago, Nick M.K. said:

It does leave me out of pocket by about £240 as I won't get a penny in finance commission (my clawback is 6 months actually) but if someone is dead set on receiving a bit of discount they can probably negotiate it on my desk rather than go through the hoops of getting car finance, then cancelling. The £60 difference is VAT saving. 

 

"HMRC has explained the treatment of dealer deposit contributions (DDCs) when motor dealers contribute towards the deposit payable to the finance company, leaving the customer to pay a reduced amount. It considers these arrangements are a discount on the headline price charged by the dealer, with VAT due on the discounted amount charged, not on the full asking price"

The HMRC brief on the clarification gives an example: ‘The headline price of a car is stated as £28,000, this is shown as being funded by £20,000 finance, a deposit of £6,000 from the customer and a DDC of £2,000. HMRC views the selling price from which VAT is due as £26,000 (£28,000 headline price less the £2,000 discount/contribution from the dealer).’

Businesses that have accounted for VAT on the headline price should correct the position either by making a claim for overpaid output tax, or by amending their VAT return."

 

Great stuff Nick well spotted.This is a recent and very helpfull new direction by HMRC and worthy of an article in Car Dealer Mag.Most of us employ accountants who you assume know everything to save you money but stuff like this just passes them by.

[trade vet 702]

1 hour ago, trade vet said:

Great stuff Nick well spotted.This is a recent and very helpfull new direction by HMRC and worthy of an article in Car Dealer Mag.Most of us employ accountants who you assume know everything to save you money but stuff like this just passes them by.

On the other hand just spotted this one on HMRC.It appears to me that it is saying that with any private use of a VAT Qualifying Car,you are liable to repay the VAT.Travelling back and forwards to work for instance was deemed ‘private use’.and probably still is.The mind boggles,....that annoying flash trader with the ex Lex RRover Sport he runs round in which he has up for £60k etc...etc

[Rory RSC 596]

12 hours ago, trade vet said:

,....that annoying flash trader with the ex Lex RRover Sport he runs round in which he has up for £60k etc...etc

[Nick M.K. 574]

12 hours ago, trade vet said:

It appears to me that it is saying that with any private use of a VAT Qualifying Car,you are liable to repay the VAT

TV, what is the logic behind this?

We have actually already paid the full VAT element which is part of the hammer price. Do they mean if we recover that VAT post sale? 

[Rory RSC 596]

59 minutes ago, Nick M.K. said:

TV, what is the logic behind this?

We have actually already paid the full VAT element which is part of the hammer price. Do they mean if we recover that VAT post sale? 

You can't buy a VAT quali, smoke about in it having claimed the vat back and say its in stock if its being used privately is what was inferred. 

[trade vet 702]

4 hours ago, Nick M.K. said:

TV, what is the logic behind this?

We have actually already paid the full VAT element which is part of the hammer price. Do they mean if we recover that VAT post sale? 

Any Private use of a company or business owned car is a taxable benefit.You can only claim VAT back on a car if it is wholly used for business use and you can prove it is not availible for private use which of course is impossible.So if you were caught out having reclaimed VAT on your VAT Qualifying ‘smoker’,they would make you repay it.....nice little earner for HMRC

[NOACROSS 414]

Back on topic ;0p

Had ivendi also call today.  They confirmed they'd seen quite a tail-off mostly too.

They then pushed a couple of other Finance Companies to be added to the platform at their expense. i.e. we have Motonovo as the automatic proposal shunt from the ivendi platform/ our website.  It then either gets accepted or declined.  From there I've always just re-proposed the declines to various other places manually as was too tight to pay for 2nd auto prop.

Any way, one company were Mallard, and the other were something I've never heard of Exo or something like that. Not Zuto.

 

Edited November 9, 2018 by NOACROSS

[grant8064 219]

On 08/11/2018 at 11:32 AM, NOACROSS said:

Just had Motonovo ring looking for feedback or ideas due to downturn in proposals/level of business. I've never had this from them before.

Funny they didn't want to hear any trade opinions when launching findandfund...now it's panic stations they're all ears