How do I maintain and grow my finance and insurance income after the ASIC flex changes, keeping customers at the heart of everything I do? Why not be your client’s truly captive finance partner and sell more cars more often.
With the recently introduced flex changes in commission following the ASIC review, trust in dealership finance and insurance has renewed, and consumer confidence is rising.
This will mean higher volumes and penetrations for the dealer’s finance and insurance products.
Clients who finance and insure with you are more likely to return, change over more quickly and be advocates for your business.
Simple enough? Yes and no.
Yes – confidence levels and integrity are up.
No large pricing differences on rates between the same lender at different sites, and more transparency.
No – lenders are now more under the microscope.
The royal commission has highlighted practices of improper lending, lack of data collection and a lack of thoroughness in assessment.
Customers who previously provided two payslips and a rate notice have to show more.
Cost of living.
No longer is household expenditure method acceptable.
We delve into groceries, bills, discretionary spending and do a forensic examination of your banking conduct.
Previous credit.
Even if you have paid the same monthly amount and now want to replace that debt with a newer asset, proof is needed you can maintain the payments.
New credit reporting shows your positive credit history over 24 months.
Yes, you have paid on time but that one credit card you thought paid can really impact your score and your ability to raise credit.
Quick credit is advertised everywhere – a short-term solution to those in need.
Checking the interest and fees you are paying may make you realise it’s not the solution, but your credit file has been accessed and credit scoring hates payday lenders – even if you didn’t take it up.
Your credit score plummets and credit access decreases.
Lenders are looking for job stability, but employers offer everything from full-time to casual, part-time, seasonal, contract, probation, etc.
Lenders quite rightly are doing more diligence, capacity and character analysis.
Everyone is striving to be seamless, compliant and customer focused while maintaining a profitable market share.
Not all your clients fit under all your lenders.
How could they? You have varying ages, employment types, occupations, residential status, credit history, needs and wants, etc.
Why can’t you access lenders that look after clients and help you sell more cars?
Not everyone can get credit.
ASIC has tightened the regulations for a reason.
Lenders’ tightening and compliance will weed out those after short-term gain.
Anything to reduce fraudsters’ increasing capabilities is also welcomed.
I see it time and again after 25 years around dealerships.
The finance person shakes the client’s hand who responds, ‘brilliant – any finance I need I’m coming to you – all my business is now yours’.
Unfortunately, you don’t always have access to help this ‘perfect client’ with your offerings.
The support opportunities, let alone the income opportunities, are limitless.
“You have my details, can you fund my boat, trailer, motor bike, jet ski, camper van, etc?”
That is a truly captive offering.
Business managers are a special breed.
Having worked with, been one, and trained them over decades – they are integral to any dealership.
The good ones manage the sales process, are part of the sales team yet leaders in the dealership and are exceptional closers.
They are income generators.
As a business manager you would love to fund ancillary assets your clients buy and help them into a car.
The benefits of financing the extra assets your clients buy are obvious.
You can have supplementary income from the additional cars, boats, etc and you are not pushing your customer to a competitor.
Their bank can do all their financing – why can’t you?
You are taking the client’s details and seeing first-hand their financial situation.
What an asset you are to them if you can consolidate that high interest loan, help with business cash flow funding, refinance a son’s loan, help dad finance that classic car he always wanted, and more.
You will truly have a customer for life.
If your client finances and insures through you the retention numbers grow drastically.
CRM systems such a Chrysalis/Key2Key can pinpoint optimum times your clients are in parity or equity and can upgrade to a new model for the same money per month.
We are credit reliant and want the newest now.
I can have that new car for so much per month and I know that in three years the new improved version will be available – so I tailor my finance that I can change over in that period.
So, how does this help me sell more cars?
You have access to a panel of lenders to fund those who don’t meet your on-site funders’ guidelines.
Imagine the confidence in the sales team when deals are delivered and think of the yard qualifying that will cease.
Your sales team will gladly introduce finance if they know you are armed with “a home for almost all”.
Word will spread.
You have access to lenders who are the most competitive in the market.
You can refinance those that don’t meet the capacity guidelines.
Lenders are increasingly against negative equity.
Get your client a short-term personal loan to cover that shortfall and restructure them so they won’t get in to that position again.
You will have more contact with your clients, CRM campaigns, database conversations, etc.
Talking to your clients creates opportunities.
You will retain your experienced F&I manager and their team, maintain their income and they will continue being productive, resulting in your experienced closers staying.
You will have a confident and supportive sales team who won’t pre-qualify, plus more finance introductions and more sales.
You will receive finance-only referrals, bringing more clients and more sales.