Editor’s Note: The following is a column that appeared in the August 2012 issue of RV Executive Today by RVDA Chairman Andy Heck. It outlines some key ways consumers benefit from dealer-assisted financing.
This fall, as we all know, is a presidential election year, and there are also many races for Senate and Congress. The individuals who are elected will play a role in certain aspects of how we run our dealerships.
One issue that continues to be on the forefront for all of us is dealer-assisted financing. We have talked often about this subject at our convention and through RV Executive Today during the past couple of years.
Some groups, including the Center for Responsible Lending, are pushing lawmakers and regulators for additional restrictions on vehicle financing – restrictions that could hurt RV dealers and the entire motor vehicle industry.
A new white paper by Northwood University calls dealer-assisted financing for vehicle purchases a “wonderful example of a free and competitive market which adds multiple choices for consumers.”
The study says dealers often gather all of the important and necessary financial information from the customer during the sales process, saving the customer the effort of a separate trip to a financial institution to provide the same information.
Gathering this information up front reduces the financial institution’s cost of processing the loan. Dealers also absorb the direct and indirect costs of marketing, transacting, and meeting federal and state point-of-sale compliance regulations that accompany financing. In short, says the study, dealers reduce the loan’s retail distribution cost.
“In many cases the customer would not save money by obtaining financing via a direct loan from a financial institution,” according to the study. “In fact, dealer-arranged financing rates are often more competitive than those offered by direct lenders. In order to serve their customers’ financing needs, dealers must be prepared to meet or beat the lowest APR offered to their customers by direct lenders.”
My dealership has had many customers who wanted to do loans through their local banks. But some of those local banks don’t have an RV program, so the customer, by financing through us, saved lots of money.
Many of you will have the opportunity to meet with national-level candidates. It’s important to tell them about the impact that some of this proposed legislation would have and about how dealers do, in fact, help customers.