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 Missouri Dealers License. Missouri dealers are required by the Department of 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.

When you 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 here.

You will learn more about financing when you take your dealer training class.

Missouri Dealer Financing