Let's look at quoting against dealerships.

Documentation Requirements.

Advising your clients you will need payslips, monthly expenses and a full application form can be a hard sell in comparison to flashing a drivers licence, jumping into your new car and driving out of the dealership.
A great document that details the risk of clients undertaking this kind of finance has been written by CAFBA. Please see it here. 

Some clients will be tempted by the ease of which they can access funding and their new assets. Let those clients know these risks, however, be resigned to let some go if this is the road they wish to travel.

Time Frames.

Settlement time frames are increased when you are taking in client's individual circumstances, verifying their financial documents, their risk profile and then reviewing a number of different solutions across multiple financial institutions.

Sadly many clients let emotion cloud their thinking when it comes to this type of finance. They have seen the vehicle, perhaps taken it for a test drive and are smitten. The last thing they want to do now is compare finance options, review policy and products and get back into their old station wagon and go home.

Dealerships take advantage of this knowledge and will aim to use it to win the deal. Outside of property, vehicle and equipment finance is often the most significant purchase your clients will make. The repercussions of making these decisions uninformed can be extremely detrimental down the track.

That being said, the turnaround time for an asset finance transaction is significantly less than that of a property. Make sure you have either the knowledge or alternatively the support to quickly move this scenario through the stages to settlement. Alternatively, let your clients know you won’t be able to assist.

NLG Leasing guides you with education and training. Our team of highly experienced asset and equipment finance specialists can guide you through this process or if need, be the direct customer contact until you feel you are ready. We will leave you with the two most important tips in regards to time frames:

- Manage expectations
- Under promise, over deliver

Rates.

This is undoubtedly the most common reason we hear that brokers cannot compete against dealerships. Ironically this is also the easiest objection to overcome. Firstly, one of the common misconceptions is that dealerships provide the finance. The reality is that they will be in partnership with a financier.

There can be instances where dealerships provide attractive finance offers to clients, however, there are often times where the clients don’t realise what they are signing up for. For instance, clients are often quoted a rate or a repayment only. Below are a few examples of why this doesn’t necessarily equate to a good deal.

Your Quote

$25,000

Rate 6% inclusive of commission

Establishment fee $300 – included in repayment

Term – 5 years

Monthly service fee – nil

Repayment - $489.12 in advance

Residual - Nil

Dealer Quote

$25,000

Rate 6% inclusive of commission

Establishment fee $300 – included in repayment

Term – 5 years

Monthly service fee – nil

Repayment - $452.58 in advance

Residual - $3000 

Tip Time.

Have you ever heard of Subvention Finance? Be aware of dealerships that offer this.  It’s what is happening when you hear about rates of 0, 1, 2%. See this example below:
Let’s say you purchase a $50,000 car with the finance rate at 1.9%. The ‘subvented’ amount in this example could be $4000. Which means, once the sale has been finalised the car manufacturer or dealership must pay the subvented amount to the lender to allow a realistic rate of return.

The dealership needs to increase their margin to make this payment to the lender which results in:
- A higher purchase price
- More GST & stamp duty

So when you are potentially sold a great deal on the finance, you may not be getting such a great deal on the car!