Accepting/providing finance pros and cons

[Nick M.K. 574]

5 minutes ago, Arfur Dealy said:

I mean does the £360 include VAT

Not that I know of, my accountant just adds the commission income to the company income when they do the accounts. 

[Arfur Dealy 823]

Just now, Nick M.K. said:

Not that I know of, my accountant just adds the commission income to the company income when they do the accounts. 

 

The thing is I only get asked around 3/4 times a year if I offer finance, they always seem to be foreigners. However, I don't promote finance on my website and state very clearly I don't offer finance..... Does your website attract remote applications or do you simply wait for someone to show up who doesn't have the actual money to buy ? 

[stockedup! 63]

There is no VAT on commission or due from it I believe.

[EPV 631]

2 minutes ago, stockedup! said:

There is no VAT on commission or due from it I believe.

Correct 

[Nick M.K. 574]

27 minutes ago, Arfur Dealy said:

Does your website attract remote applications or do you simply wait for someone to show up who doesn't have the actual money to buy ? 

I promote it very actively on AT including automatic application from my website. Finance customers typically ask for their finance options immediately although some leave this "secret card" until after their viewing. 

[NickGCS 14]

We have 4/5 lenders we can go directly to, and if we can’t get them picked up with one or 2 of them it goes off to the broker. 

I’d definitely recommend having a direct lender to maximise your commission, we’ve found Motonovo and Santander to offer the best return.

We push it as much as we can, Facebook posts with examples, website calculators, online applications etc. Motonovo through Ivendi do a good self service application you can email to punters, which is good if you get a sniff of sub-prime or time waster.

Never had any problems at all with them coming back. Unwound a couple deals because it was the right thing to do over the years but that was through the customer not the finance companies!

[trade vet 697]

2 hours ago, grant8064 said:

Whoever told you that isn't correct.

We use a few different firms and have never taken funding, they ask but don't push it or make it a condition of their lending.

One we use we give max 100K of business to per year, 10% of balance comms are still there and they're very happy we use them when we do. 6k balance = £620 comms this week.

We're a small dealer and have two or three finance reps a week visiting touting for business.

The real bottom line, IMO, is that they're business that need people to use their services. They're hungry for dealers....almost as hungry for business as the card machine reps!

 

FWIW - Everything Nick said i'd 'Like' if I had the button.

Know what you're responsibilities are to both punter and lender before getting involved and read and understand the FCA guidelines.

Make sure your cars are 100% before handover, four years and hundreds of deals in and we've never had a charge back or complaint from a finance company because we spend on prep. You can't predict the future but you can buy carefully, prep well and test drive everything yourself prior to handover.

Make sure your stock is 'finance worthy'...for example 100k+ German stuff is asking for trouble.

Get a good rep, you don't have to like them but know a good one when you find them.

 

Finally, and it's personal opinion, don't be morally corrupt. We've all met or heard about punters sewn into a shed at Moneybarn 49.9% apr that doesn't suit their needs. Understand that when someone takes on a loan that they might be paying back for five years it'll affect their lives. Don't stitch people up basically.

Hi Grant

£600 commission on a £6k balance,what rate was that ?

I have previously given loads of business to B/Horse,Close,Santander,so 2 weeks ago when we got our licence for the new pitch,I spoke to Santander because I like the rep.I told him there would not be much maybe £200k at most as it is a small 25 car pitch.He just said sorry you are too small,just use a broker.I am presently wading through Evolution brokers very cleverly worded T and C’s.So checking them out,I was interested to see they are also retail dealers.They actually trade as Mike Brewer Motors ,could that be a conflict of interest ?

 

 

[grant8064 219]

20 minutes ago, trade vet said:

Hi Grant

£600 commission on a £6k balance,what rate was that ?

I have previously given loads of business to B/Horse,Close,Santander,so 2 weeks ago when we got our licence for the new pitch,I spoke to Santander because I like the rep.I told him there would not be much maybe £200k at most as it is a small 25 car pitch.He just said sorry you are too small,just use a broker.I am presently wading through Evolution brokers very cleverly worded T and C’s.So checking them out,I was interested to see they are also retail dealers.They actually trade as Mike Brewer Motors ,could that be a conflict of interest ?

 

 

7.5 flat. Most are lower though, £300 average on a 4-5k balance for us. 

I don't know anyone using Black Horse these days. Know of one guy using Santander but we found them very unhelpful and frankly quite arrogant, I don't deal with people like that. Both are a bit old school and slow IMO. If a rep can't be bothered with acquiring new business then it says it all.

We use Moto, Blue and First Response, plus cf247 when we can't avoid it. They all have their place and from my experience are all helpful and supportive but I get that it varies from area to area. All have similar, really easy to use, online portals. Self serve, sign at home etc.

Didn't know Evo trade as Brewers but i'm not surprised, no brainer for a finance house to own a supermarket really. I'd imagine cf247 have a similar thing going on or planned at least

[lastyboy 23]

5 hours ago, stockedup! said:

Just be sensible what you choose to finance, better to do it than not IMO, I don't do a lot but what I do makes a bit more money. I count it as a bonus.

 

Exactly my take on things. I do a bit of finance, earn  a bit of commission but at same point I dont really push it.

[trade vet 697]

12 minutes ago, grant8064 said:

7.5 flat. Most are lower though, £300 average on a 4-5k balance for us. 

I don't know anyone using Black Horse these days. Know of one guy using Santander but we found them very unhelpful and frankly quite arrogant, I don't deal with people like that. Both are a bit old school and slow IMO. If a rep can't be bothered with acquiring new business then it says it all.

We use Moto, Blue and First Response, plus cf247 when we can't avoid it. They all have their place and from my experience are all helpful and supportive but I get that it varies from area to area. All have similar, really easy to use, online portals. Self serve, sign at home etc.

Didn't know Evo trade as Brewers but i'm not surprised, no brainer for a finance house to own a supermarket really. I'd imagine cf247 have a similar thing going on or planned at least

7.5% flat on a prime,bit expensive,the punter could settle it off early with one of those Sainsbury’s 3% deals and you get zero.

Our Santander guy is good,probably just obeying orders,they prefer big accounts.My old pitch have been using them a long time.

[grant8064 219]

8 hours ago, trade vet said:

7.5% flat on a prime,bit expensive,the punter could settle it off early with one of those Sainsbury’s 3% deals and you get zero.

Our Santander guy is good,probably just obeying orders,they prefer big accounts.My old pitch have been using them a long time.

Was done on my day off so I don't know the details but like I said usually the rate and comm is lower.There's always the risk it'll get settled early so you can't be relying on it too much.

I always wonder if the big players that rely on commission for their profits have a special commission deal with clawbacks/early settlement?

[c_cars 56]

9 hours ago, lastyboy said:

Exactly my take on things. I do a bit of finance, earn  a bit of commission but at same point I dont really push it.

Same here, it’s not a massive thing for our business.

Even though finance is advertised on our website our advertised rate is 5.9 flat and that gives us enough commission on the £5k to £15k stuff we sell.

Everything goes to MotoNovo first simply for ease of use, if they fail there then it’s straight to a broker. Near and mid prime still gives a little commission depending on the balance and anything sub prime that we’re glad to save gives us a token gesture of commission.

[trade vet 697]

59 minutes ago, grant8064 said:

Was done on my day off so I don't know the details but like I said usually the rate and comm is lower.There's always the risk it'll get settled early so you can't be relying on it too much.

I always wonder if the big players that rely on commission for their profits have a special commission deal with clawbacks/early settlement?

I agree,you charge too much and you are inviting clawbacks.The big players probably still get degrees of volume bonus based on the quality of business,% of defaults,early settlements,proposal acceptance rates and so on.I am sure everyone gets 100% clawbacks for defaults and early settlements (3 months) .

[Dealer 54]

First companies we use due to the healthy commissions are:

Blue, Close, Motonovo

Second tier if credit is a little iffy and the above have declined 

First Response

Third tier when we are really struggling and all the above have turned their noses up then it's sent to

Advantage, Mallard, Zuto, Cf247 and anyone else who we think we may have a remote chance with! 

[Rory RSC 596]

We are up to around a third of all sales on finance and I have personally worked very hard for the business  to get it there. The additional commission is always welcomed. 

A good go to lender and then a good broker are essential. 

Most finance companies are not bad to deal with, only problems tend to be selling old sporty models to penniless punters at high interest rates who nail the cars into the ground tearing about and then we are expected to fix them. On 95% of all other deals never an issue.

I can't stand CF247 over the past couple of years they have gone bad to worse. 

[Tadams 29]

18 hours ago, MOTORS said:

Yes, you have to be FCA regulated to deal with any finance house. Don't forget to include debt adjusting.

Actually you don't there are brokers that if they see the value in a relationship thy will let you use their licence. 

I don't think offering finance is essential however its certainly a nice string to the bow and a nice offering to be able to mention, 

There is still the usual stigma of the used car salesman working in cash only to try and hide something unfortunately i think being able to offer finance can make you look more respectable as a business (regardless if that is true or not).

For us in was a trade off between how much time we wanted to spend on a deal vs the commission.

The guys are more useful selling the cars than sat behind a computer filling out apps and getting proofs so we send everything to one broker who does all or finance, they speak with the customer, they get the proofs (where needed) and they complete the legal stuff and go through the signing process with the customer, all we need to do is generate an invoice. 

Admittedly the comms isn't the best  but from the example we were given before we are only about £50 worse off but based on the time saved and how the saved time free's up more time to sell to other customer it's a hit we are more than happy to take. 

Comms is a direct payment in our account at the start of every month.  

     

Edited November 22, 2018 by Tadams

[MOTORS 25]

1 hour ago, Tadams said:

Actually you don't there are brokers that if they see the value in a relationship thy will let you use their licence. 

I don't think offering finance is essential however its certainly a nice string to the bow and a nice offering to be able to mention, 

There is still the usual stigma of the used car salesman working in cash only to try and hide something unfortunately i think being able to offer finance can make you look more respectable as a business (regardless if that is true or not).

For us in was a trade off between how much time we wanted to spend on a deal vs the commission.

The guys are more useful selling the cars than sat behind a computer filling out apps and getting proofs so we send everything to one broker who does all or finance, they speak with the customer, they get the proofs (where needed) and they complete the legal stuff and go through the signing process with the customer, all we need to do is generate an invoice. 

Admittedly the comms isn't the best  but from the example we were given before we are only about £50 worse off but based on the time saved and how the saved time free's up more time to sell to other customer it's a hit we are more than happy to take. 

Comms is a direct payment in our account at the start of every month.  

     

To deal directly with a finance house you need to be FCA regulated. But yes as you say anyone can deal with a broker without being FCA regulated

[tradegirl 112]

On 21/11/2018 at 6:08 PM, Arfur Dealy said:

TG, the reason I have chosen not to povide finance is because I specialise in higher mileage older prestige, plus I really don't like the idea of an a Finance Company bending over to a bully of a billy and demanding I refund them because they haven't got the balls to stand up to the billy.....

However, that doesn't mean you shouldn't. 

It also means I shouldn't, if I knew I would be dealing with a Finance Company who would stand by me then I might go for it....... I am thinking in changing my stock profile potentially slightly and might and I mean might be tempted to offer it..... 

Hi Simon. Thanks for the reply and sorry I went AWOL.

Ok I understand. In the first case you described, what happens if you refuse to refund the customer?

I already know the answer to this I think, But if a customer sets up their own finance, and we just accept it (as opposed to provide it) there's no commission to be earnt there is there?

[SandraT 0]

Hi tradegirl!

If be honest, I don't know what exactly the pros and cons can be in this situation... But recently I read an article like this https://paydayiom.co.uk/advices/find-the-best-value-when-borrowing-5000 where were described all main points. Have you tried to research about this?

[Willoughby 15]

We don't do much on finance but when we do could be a 20K or 30K deal - so use a broker. 

Advice we got from FCA was that even if you only refer customers to a broker you still need a Limited Permissions. Main reason being that the introduction confers a level of financial awareness/responsibility hence you should have a licence.... any doubt FCA do a "Decision Tool"  that defines what licence if any you need.....   

 

 

 

  

[David Ayers 171]

Do really work for CFG or are you actually one of their rivals who have come on here to spam everybody in an attempt to damage CFGs business by annoying multiple dealers.

If so may I congratulate you on a successful operation Sir!