Missouri Dealer Financing
Financing is an important part of the
operation of any Missouri dealership. When you become a licensed
Missouri dealer, is very easy to
tell your customers just to bring cash into your dealership when
they are purchasing vehicles at your dealership. But as a dealer you will turn
about 90 percent of your customers away. A very large majority
of your customers will need a loan to purchase a vehicle from
your dealership. By helping your customers obtain financing you
will sell many, many more vehicles with your
License. Missouri dealers are required by the
Revenue to sell at least 8
vehicles every year in order to renew your dealer license. By
helping your customers obtain financing, you will easily meet
your minimum dealer selling requiredments every year so you may
apply for your license the following year.
become a licensed dealer you may experience a customer that
tells you they love the car, they are buying the car today, they
just need to go to the bank and get a loan. When the customer
leaves your lot, you have basically lost the sale. They rarely
come back. As licensed dealers, we need to "Always Be Closing".
If possible, by helping the customer get a loan for the vehicle
you are trying to sell without leaving the lot will lead to many
more sales, which helps you run a successful deaership.
There are 2 types of financing that you can offer your customers
once you have obtained your license. Dealers may offer On The Spot Financing and
Buy Here Pay Here.
You will find out very soon after you recieve
your dealers license that many, many companies want to give
loans to the customers on your lot. Many time we refer to thes
companies as "Third Party Lenders". When you create an account
with a third party lender and you have a customer on your dealer
lot that states they want to go to the bank to obtain a car
loan, you can say "Hold on, you don't have to go to the bank, we
have "On The Spot Financing Right Here".
At this point,
you take your customer into the lot, log onto your third party
lending account, enter their name, birthdate, and social
security number, and within 15 to 20 seconds, you have multiple
lending options for your customer regardless of their credit.
You will be able to get loans for persons with good credit,
average credit or bad credit. If you are getting a loan for
someone with bad credit, you will be helping them get what is
known a "Sub-Prime" loan. And when you help the person on your
dealer lot obtain a sub-prime loan, you are helping them rebuild
there credit assuming they are going to make the payments.
Next, the customer can choose and accept the terms.
When they accept the terms, they get the loan for the vehicle
you are selling them, they make payments to the third party
lender, and within 12 to 24 hours, the third party lender wire
transfers the entire vehicel purchase price into your designated
bank account. What happens if the customer stops making payments
on the loan? It would not be the dealer's problem, the third
party lender would either do the reposession themselves or hire
a recovery company to do the vehicle repossession. This way the
dealer can just move on to selling the next vehicle and never
worry about repossessions.
Another type of financing for
Missouri dealers would be operating a Buy Here Pay Here
dealership. Buy Here Pay Here takes place when you might buy a
vehicle from a dealer auction for $1,000 then sell it to someone
that cannot get a bank loan for, say for example, $6,000. The
customer would make payments directly to your dealership on a
bi-weekly or monthly basis. This allows the customer to buy the
vehicle at your dealership then pay for the vehicle at your
dealership. This is why it is called Buy Here Pay Here.
It is never recommended to obtain a dealers license for the
first time then start a buy here pay here dealership the next
week. It is always recommended to start your dealership using a
third party lender to handle your financing. Once you have
gained some experience with your new dealers license, buy here
pay here may be at type of financing you would like to try. Be
sure to consult with an attorney before offering any type of
lending with your dealership.
We will cover the mandatory
State and Federal Finance laws in your dealer training class.
View the Dealer Class Schedule
You will learn more about
financing when you take your dealer training class.
Missouri Dealer Financing