Finance for cars under £4000

[Max Branning 149]

We mostly do cars priced from 1500 - 4000 and we are not set up for car finance. We are selling them ok so no problem there but we have had several occasions where customers have asked "do you do finance" and when we say no they leave. I am wondering if getting set up will make a great difference to our turnover and if its worth the effort and cost of getting set up (looking at the fca website it looks complicated).

I have been told but am not sure on this that it is possible for a customer to sort out there own car finance and the funds can be sent to the dealer even without FCA registration, not sure if this is true or even allowed.

To any other dealers working at this sort of price range are you set up for finance and do you think it makes much difference to your turnover.

 

[James Bush 95]

Morning, my price rang is similar up to around £7000 and I was increasingly getting asked for finance so I got myself FCA regulated. It looks a complicated process but its fairly straight forward once you get into it and the helpline is surprisingly helpful. If you're a bit slack with paperwork I'd leave it alone because when it comes to reporting time it can be a bit of a nightmare unless you have everything to hand. The only other thing to check is, is it worth the money? Are you going to sell enough cars on finance to cover the cost of FCA registration and the fees? Like everything else it this trade I have some months where everything is sold on finance and then a few months where I hardly take a prop.

There is an option to become accredited to a finance company and sell under there registration, I know a couple of guys who've looked into this and found it very hard to get somebody to work with, add to this zero finance commission, being tied to one finance company and there underwriting criteria and it doesn't look as attractive.

[sparky 274]

We mostly do cars priced from 1500 - 4000 and we are not set up for car finance. We are selling them ok so no problem there but we have had several occasions where customers have asked "do you do finance" and when we say no they leave. I am wondering if getting set up will make a great difference to our turnover and if its worth the effort and cost of getting set up (looking at the fca website it looks complicated).

I have been told but am not sure on this that it is possible for a customer to sort out there own car finance and the funds can be sent to the dealer even without FCA registration, not sure if this is true or even allowed.

To any other dealers working at this sort of price range are you set up for finance and do you think it makes much difference to your turnover.

 

I'd say it was a bit of a no brainer. If you only do one a month on finance then surely it has to be worth it?

[Max Branning 149]

For me its a case of weighing it up, will i sell MORE cars because i am set up for finance, unless it is considerably more than i am doing now i am not sure if its worth the hassle and cost. This is why i am asking any other traders at this price range how they find it either with or without finance. If i was doing cars £4000 and over i would say finance is a must as this sort of money is harder to come by for customers. The vast majority of the cars i sell go on the card and many customers love the 0% credit card options, i think this is easily done on say a 2995 car.

What worries me slightly is that many customers who CAN afford to buy or have access to a credit card will instead choose to take finance if you offer it. This means that you are not actually selling any more cars just offering a different way for people to buy, i am only interested if my turnover will increase dramatically.

[Gavin@Rousdon 137]

Thats is the best price range for finance. All the online lenders and banks offer their best rates for over £5000 or £6000. I imagine you can make more commission on a finance deal for £3500 then on a £10k deal where you have to cut the rate to the bone.  

[SC Derby 259]

For me its a case of weighing it up, will i sell MORE cars because i am set up for finance, unless it is considerably more than i am doing now i am not sure if its worth the hassle and cost. This is why i am asking any other traders at this price range how they find it either with or without finance. If i was doing cars £4000 and over i would say finance is a must as this sort of money is harder to come by for customers. The vast majority of the cars i sell go on the card and many customers love the 0% credit card options, i think this is easily done on say a 2995 car.

What worries me slightly is that many customers who CAN afford to buy or have access to a credit card will instead choose to take finance if you offer it. This means that you are not actually selling any more cars just offering a different way for people to buy, i am only interested if my turnover will increase dramatically.

surely the commission you can make should come into it, 5 deals a month say average of £150-£200  commission

nice sweet bonus at the end of each month?

[Max Branning 149]

To be honest i didnt realise that commision would be that much. If thats correct then yes i would be pushing finance on every motor !

I will have to get the ball rolling and look into it a bit more the fca website is so confusing though will probably give them a call...

[sparky 274]

To give you an idea, I've just done one with Motonovo. Customer borrowed £2500 over 3 years at 7% and commission was £135. Not going to get me fat but it all helps the job along.

[SC Derby 259]

You can stick the commission in a pot and help with the warranty claims ?

I think one month we got £1,300 commission, that was our record if you like and that felt good, almost like two extra sales for 0 output.

[Rory RSC 596]

Not sure if you ever decided to go for this.

 

I got set up for finance just a bit earlier this year. Like you I was getting enquiries about can you do finance and having to say 'no' to people wanting to buy my cars.

I got hold of the local rep from Close Motor Finance and got him to help me do the FCA stuff as it seemed complex. In reality it was not to bad but there was some aspects of it I was not to sure on.  His assistance paid off. In the first 4 months we had written £147,000 worth of business for Close. I can say that we would not have turned that over if I could not offer finance. I think we have averaged just over £1100 commission a month and I usually knock stuff out at 5 or 6 % flat.

Based on projections over the next 12 Months the finance company will easily pay us commission of over 15k. 

 

I would certainly be in the yes camp and think it really adds to the credibility of the dealer offering this service most customers probably expect.