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Non-Prime Financing’s Role in RV Sector
Posted By RVBusiness On April 8, 2010 @ 1:35 pm In Breaking News | 1 Comment
Editor’s Note: This article was written by Lorraine Mariotti and Laura Smith and provided by Priority One Financial Services.
Many dealers are skeptical about using non-prime lenders to finance their customers’ boats and RVs, but if you don’t offer non-prime financing, you are leaving money on the table. For those who don’t qualify for traditional loans, non-prime loans might be the answer for those customers with lower credit scores, insufficient or comparable credit, bankruptcy and other unique credit situations.
The very definition of a non-prime lender is a financial institution that specializes in making loans to lesser-qualified borrowers at a higher rate due to the higher risk of default. Just as it is with most businesses, the higher the risk, the higher the cost. Critics contend that high rates and greedy lending practices are common in the non-prime market, but there are laws in place to protect consumers from these practices and there are many reputable non-prime lenders committed to taking a risk on the credit-challenged to help them rebuild their credit scores.
There are significant advantages to using non-prime lenders that cannot be overlooked. One out of three consumers in the U.S. has had credit problems in the past. The main benefits to funding loans with non-prime lenders are:
Now that you realize how important non-prime financing can be to your dealership, it’s time to choose which non-prime lenders to use. When choosing a non-prime lender, follow these tips:
Once you’ve established a non-prime relationship, the next step is ensuring your F&I manager is able to sell these types of loans to your customers. All too often, inexperienced F&I managers assume the customer will not accept a non-prime loan and lose the sale. To successfully set up your customer for a non-prime loan, it’s essential to follow these simple steps:
The ever-growing numbers of credit-challenged customers in this country make non-prime lending more important than ever to your dealership’s financial growth. Knowing what you gain from funding with non-prime lenders, how to choose the right one and selling this option to your customers may be just what is needed to exceed your goals now and keep your doors open well into the future.
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