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Different Quotes for Different Folks

7 Feb 2020 11:39 AM -
Did you know that in 2018, the asset and equipment finance industry put a ban on flex commission structure for consumer applications? Do you know what flex commission was? Or why it was abolished and what this means for the way you quote consumer asset finance loans? Today we are going to talk about this and the impact it has had on brokers quoting consumer applications moving forward. 

What is Flex Commission? 

Flex commission was the term describing the process of adding commission income into a consumer asset finance deal. For example, in the past under this model our lender partners would review an application and provide brokers/dealers with a minimum rate that they were prepared to offer the client based on the scenario and individual circumstances. The broker/dealer could then increase the rate (within each of the lenders allowable limits) to incorporate their commission into the deal. 

What's the Problem? 

We have included a link below from an article in the adviser that explained the perceived issue with this style of loading commission. See more here. In short the concern was that it resulted in consumers paying higher rates on their car loans so that third parties could earn higher commissions. The dealer/broker dictated the maximum rate rather than the lender. 

How do we Quote Consumer Car Loans now? 

Consequently the way we quote consumer car loans now is quite simple. When brokers quote, the financiers will provide a rate for the client based on the specifications of the deal. This rate will incorporate maximum commission based on client profile. The broker can then discount the rate and reduce the commission down to the lenders lowest allowable limit. In short, brokers can reduce, rather than increase the rate provided by the lender. 

When did it change? Why haven’t I heard about it? 

In November 2018, we saw the ban implemented. In recent discussions with our broker partners we realized this wasn’t necessarily common knowledge and the reason for that is likely to avoid confusion. Our referring brokers don’t work with the lender directly as NLG Leasing acts as an intermediary. 
Because our previous quoting tool did not cater for this new commission model, we suggested that instead of using the tool for consumer transactions, that a call be placed to our team who will then provide you a quote directly. This way, once we had a good understanding of the client submission and the desired broker income, we could navigate the change on your behalf. Next we would then negotiate with our lender partners to provide you with a rate/quote that suited your client. 

What's the Relevance? 

The issue with this process is it took away the ability to quote consumer car loans with your clients on the spot. Moreover, for those still quoting consumers the same way as commercial, it increased the likelihood of inaccurate quotes which could then result in a poor client experience. This is just one of the many reasons we at NLG Leasing have built a new user platform that allows for this new style of quoting. Consequently, there is now a different process when quoting consumer and commercial applications within NLG Connect. 

The New Process via NLG Connect 

As of January 2020, we launched our new and improved user platform NLG Connect. The platform has three different ways you can prepare quotes for your clients if you are taking the lead through from quote to full application: 
  1. Quick Quote Tool 
  2. Quick Quote Tool in a Lead 
  3. Lender Quote Comparison Tool 
Let’s take a look at the difference between the three tools: 

Quick Quote Tool 
The Quick Quote Tool is located under the Library tab from your homepage. Here, you can input the primary client information, the preferred finance structure and the asset information. You will not include any income for yourself and then you will search available lenders. Based on information input, all lenders with an appetite for this transaction will appear in the search results. NLG Connect will display their rates incorporating maximum commission available in this deal. You will then be able to select a lender, view the commission incorporated. Subject to lender policy, at your discretion you can discount up to 2%, reducing the commission income accordingly. Note: the Quick Quote Tool does not allow you to save the quote in NLG Connect. 

Quick Quote Tool in a Lead 
We recommend creating a lead prior to generating a quote, so that all quotes will be saved and visible when you jump into the lead in the future. Furthermore, when the lead progresses through to the application stage, you will not need to re-enter the details. It is good business practice to always create a lead. By doing this you will be able to monitor your asset finance deals. Together we can analyse your conversion rates and support you to identify any missed opportunities. 

Lender Quote Comparison Tool 
This style of quoting can only be done once the lead has been created. It is the preferred method when quoting consumers as it provides a comparison of all options available. If you have entered the client particulars, you will also see the uncommitted monthly income according to each of the individual lender serviceability calculators. 

Quoting Questions in NLG Connect 

Another change that’s been introduced with the new system to help improve the accuracy of quotes are our more comprehensive quoting questions. In the past, when quoting an application you would only input details about the asset and the finance. There was just one question relating to the client asking if they are homeowners. 

As we all know, there are various factors which influence a client’s interest rate. NLG Connect will now ask you some additional quoting questions (as seen below), to increase the accuracy of quotes and to improve the overall client and user experience. We recommend completing all of these questions to utilize the systems full capabilities. To avoid frustration, however, we have included a “not essential” answer in every additional question. This means if you want to progress through to a quote but don’t yet have the answer to one of the questions you can still proceed. See example below. 

Just a reminder; shy of reaching lender approval stage, all rates are indicative only. Ensure you make your clients aware of this and manage their expectations accordingly. 

The Art of Being Remarkable. How to Boycott Being Transactional? 

Written by NLG Leasing Managing Director Nick Young 

Facilitating great customer service is all about being remarkable: which, when taking the term literally stimulates remarks, or dialogue, because the subject is so unusual, exceptional, interesting, or excellent. Remarkable gets your attention. More so, being remarkable accelerates the utopian state of having a constant stream of customers championing your cause and stimulating the referral pipeline.
 
Naturally, happy clients require the staples: understanding of their circumstance, industry/ product knowledge, appropriate solutions and timely execution. Though competently completing these tasks alone are rarely what prompts a rave review: it’s how they’ve been performed. As to the client, the value of the exchange is not just transactional. It’s how the client has felt through the process and what it means for them personally to have an issue or opportunity resolved. To bypass being considered a facilitator, you need to be integrated, connected and genuinely remarkable before, during and after any deal. 

Read more from The Advisor article here.

Happy to help. If you are looking for a solution to assist your consumer and commercial clients with all asset, equipment and cash flow finance solutions - but don’t yet have the knowledge and can’t justify the high costs associated with multiple accreditations, specialist systems or a full time specialist on the payroll – then NLG Leasing is the right business partner for you. If you would like more assistance, please contact the NLG Leasing team on 1300 722 011 or email support@nlgleasing.com.au