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Non-Prime Financing’s Role in RV Sector

Nonprime Lenders Article 4-7-2010-1Editor’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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1 Comment To "Non-Prime Financing’s Role in RV Sector"

#1 Comment By Cathy Aron On April 11, 2010 @ 6:59 pm

You’ve described the non-prime financing for RV purchasers very clearly. Of particular importance is the non-prime customer’s perceived value of the efforts and extra care taken to get their financing approved. These customers typically know very well that their credit is damaged and are grateful that somebody, somewhere took the time to explain their options…and help them get a YES! It’s important with these customers too, that disability insurance on their loan and an extended warranty on their unit be strongly recommended to avoid future unexpected surprises that will only further hurt their credit score. A sub-prime finance client must be particularly attentive to prepare themselves for a flawless payment record and it’s up to the F&I Manager to educate them about this. And remember, this is about the client’s needs, not the F&I Manager’s pockets.