What Options Are Available When Offering Retail Finance?

For retailers who have never offered retail finance then take a few minutes of your time to find out what it can do for your business, what it takes to get a facility in place and what the alternatives are if you can’t get a direct facility.

True retail finance involves the use of Debtor creditor Supplier agreements and requires the retailer to have a consumer credit licence with category C coverage on it. This will enable you to act as a broker and process consumer credit agreements through your various trading channels IE Web, Shop or mail order.

When looking for retail finance businesses are usually talking about Interest free credit (IFC) as used by many large furniture outlets. There is also the Buy Now Pay Later (BNPL) product largely used in lower margin sectors such as IT and consumer electronics shops. This product is not to be confused with IFC though as there is a significant difference between the two offers plus it’s also illegal for BNPL to be presented as IFC. Lastly there is interest bearing or classic credit, where the customer pays a rate of interest determined by the retailer.

There are other offers that could also be considered retail finance. Store cards as offered by large department stores for example and even some co-branded credit cards available through many large national retailers and online resellers. True retail finance though in my mind is fixed-term credit agreements that are specific to the purchase of goods and/or services from a specific retailer.

To offer retail finance a retailer usually needs to meet certain criteria to be accepted by a lender as an introducer. The criteria will vary from one lender to another but generally they are consistent in that they will all consider the products you sell, your retail sales turnover and your time in business. It may be that your business doesn’t meet some or all of the criteria and therefore leaves you without a retail finance offering.

This is an issue faced by many businesses throughout the UK and considering the recent history in the market where two previously key players withdrew from the sector out and another went into administration it may not change much in the near future.

The options then are to look to independent brokers to help your customers who need finance the most get assistance in sourcing a loan that can then be used to purchase from you. It is a process sometimes dressed up as retail finance but the truth is that it is simply an alternative to traditional retail finance for companies who can’t get a direct line into one of the 6 main lenders. It may also be treated as a supplement to traditional retail finance where we may offer to help customers declined by a lender but still needing credit in order to buy.

If you can a direct line arrangement in place with a lender then this frankly is the best process for you being that you will get paid directly by the lender and have control over the rates on offer. You won’t though be able to control the acceptance rates of the lender and in this sense having a back up offer may be very useful for business.

But what if you can’t get a direct facility? It is possible to advertise third-party facilities and enable customers who perhaps have been turned down for a bank loan or credit card.

If you have any questions regarding the Financial market then please get in touch via my website. I am happy to offer guidance on what’s available in the market based on personal experience and an honest appraisal of what options are best for your business.

Furniture Financing

If you would like to buy some new furnishings you can use furniture financing to do it with. Many furniture stores offer financing options for their customers. Most major brands also offer financing to qualified buyers. One such company is GE. You can receive financing through GE for any of the products they carry including many styles of furniture. The company offers an easy to find application form on their furniture store website. They offer varied plans including no interest for 6 months.

Most of the online stores that offer financing will also have an application for available online. The form is easy to fill out and you generally receive a response within 24 hours of submitting your application. This is convenient if you want to purchase an item that is on special because it allows you to take immediate action and use your financing to purchase items. These companies will have certain requirements you need to meet to be approved for credit. You need a good credit rating and a steady source of income.

You can also check with any furniture stores in your area to see what they offer in the way of financing. If you are interested in buying pieces that cost a lot of money such as a full dining set, you can get help by taking advantage of a store’s financing program. The amounts available will depend on the store’s individual qualifications based on your application. The financing will generally have some interest rate involved in it so be sure to read the contract before signing.

If you don’t have the qualifications to get furniture financing you can always try to get money through other types of companies. You might qualify to receive as much as $1000 from a fast cash loan company if you own your own car. You can sometimes find companies that will give you an advance against your tax refund if you provide proof of what you will be receiving. Having the option of using financing to purchase fine furniture with is nice to have when you see particular items go on sale that you would like to own.

Retail and C-Store Equipment Financing

Retail and C store equipment includes computerized cash registers, scanners, store fixture and so on. Though there is variety of retail and C-store equipment, they need to serve the same purpose- satisfying the customers. Servicing the customers is the main aim of any business so as in retail business. Any inefficient lighting system or a dirty entrance may lead to customer loss. Hence you need to equip your retail or C store with better retail equipments. You may need retail and C store equipment financing for this purpose.

Since there are various types of retail or chain stores, the retail and c store equipment financing options may vary depending upon the type and size of the store. Petroleum and gasoline service station financing is one such option that help in acquiring gas pumps and other products which increases the convenience of the customers. In fact a petroleum service station is becoming convenience store nowadays providing food, drinks along with fuel. Some other equipment like Leak detecting device, dispensers, underground storage tanks etc are essential for the regular operation of a petroleum and gasoline service station. Seeking the help of any reliable financing company would help acquiring all the essential equipment.

A point of sale equipment financing is a part of retail and C store equipment financing. The point of sale equipment may include cash register, credit card terminal and so on. They also include bar code scanning, cash drawers and inventory scanning and they help increasing the turnover of inventory faster and so investing on them is always advisable.

Though they are essential for smooth operation of any retail store, it is not possible for many retailers to acquire them. This is due to the high price tags of this sophisticated equipment. However retail and C store financing helps almost all the retailers to acquire the essential equipment for their store. The reliable financing companies offer assistance to the retailers in better terms.

Shelf and display cabinets are essential for any retail or Chain store. In fact they are the back bone of any retail store. An attractive, clean display cabinet can inspire the customers and thereby increase the revenue of the store. In turn poor shelving would reduce the sales. Hence retail and C store financing is required to get neat, functional shelves and display cabinets. The retailer therefore can increase his sales and earn great profits.

Any retail store big or small needs to keep updated efficient equipment to run the store smoothly. The sophisticated and unique nature of certain equipment may carry high price tags. Therefore many of the retail store owners may hesitate to acquire them. But retail and C store financing options provided by the valid financing companies helps every retailer to keep the costly equipments at his store. These companies offer financial assistance at low interest rates and so the retailer can pay it easily in monthly repayments. Since these companies do not involve any cumbersome procedures, it is easy to get financial help for any retail store owner

Furniture Financing and Furniture Credit Options

There are many reasons for seeking furniture financing, and there are just as many furniture credit options available to you. In some cases it makes financial sense to pay for furniture over a period of time, particularly if you can get interest-free credit. Rather than furnish your home by paying cash, you can keep the cash in a savings account earning interest while you repay the furniture interest-free over 6 months or even a year.

This could amount to a significant sum for a young couple purchasing their first home and having to furnish it starting only with any furniture given as wedding presents. Others might have to purchase furniture at a difficult time, such as when moving house: you will have plenty other expenses to face other than furnishing your new home, so furniture financing will come in very handy.

There are also furniture credit options available for those who have previously fallen on hard times and perhaps have a bad credit record. You may be repaying bad debts, but cannot get unsecure credit such as a credit card or store card because credit score has not improved sufficiently for you to pass the check. You could take a secured loan if you own your home, but what if you rent? In any case, secure loans are to be avoided because you could lose your home if you default on the repayments.

Irrespective of the reason for you seeking furniture financing, there are furniture credit options available to meet any of the scenarios described above. Here are just a few of the types of finance available.

1. Store Credit Card

Your preferred furniture store might offer you a store credit card issued by a firm such as Wells Fargo. The card enables you to purchase any item from the store concerned up to a set credit limit. This is a very convenient method of furniture financing, and many card issuers will offer an interest-free agreement for a set period or if individual purchases reach a certain minimum amount.

For example, one store credit card arranged through Wells Fargo offers 6 months interest free on their card, or a whole year free of interest if a minimum $500 purchase is made. This would generally be a single receipt rather than if the total sum owed reached $500. However, considering the average consumer credit card rate is currently 16.9% in the USA, a $1,000 spend on furniture would save you $169 during that year! That’s a significant saving.

Not only that, but some furniture stores offer exclusive benefits to customers using their card. Some of these operate on a rewards system while others offer reduced prices on certain goods only for those customers using the card to make payment. Such credit cards are fine if you repay the furniture within the interest-free period. If you go over that period, then it could get expensive.

2. Unsecured Loan

Failing that, you may be able to get furniture credit in the form of an unsecured loan. This is a form of furniture financing where you offer no security for the sum required, and the lender relies on a good record of repaying past credit. A credit report will usually be obtained and if your credit is good then you get the loan.

You can often apply for the loan online, and will have to provide all your financial details, such as your total income, mortgage or rent payment and details of any existing credit and loans. Once you have been approved, you receive the cash or are enabled to purchase furniture up to the sum approved, and you can then buy your furniture. This is obviously a more expensive furniture financing option than the free-interest card. However, the sooner you repay the sum borrowed the less expensive it will be. Some firms apply a 90 day limit, while others allow much longer.

3. Bad Credit Furniture Financing

If your credit is shot, then your furniture credit options are very limited. However, it will still be possible to borrow money for your purchases at a higher interest rate. You would normally use this option only when it was imperative that you purchase the furniture you need. Many are locally based, and you must live in-state.

With some, you must also be in current employment earning at least $1,000 monthly, and must also possess an active checking bank account. The monthly payments are deducted from your bank account, making this a fairly simple way of financing the furnishing of your home.

These are just three of the furniture financing and furniture credit options available to you today. There are more, but these methods are popular depending on your current financial situation. You will find one of more of these available on the websites of many furniture stores.

Introduction To Special Finance

Have you had trouble sleeping lately? Been watching any “trash TV” or late night infomercials? Then, without a doubt, you’ve been inundated with “Bad Credit Mania”. It seems like every time you turn your TV on, there’s somebody telling you that, regardless of how bad your credit may be, you can get approved for a loan, with no money down, for that beautiful high line import sports car, or how about that beautiful luxury SUV. And payments that are so low, you hardly have made them. Just come on in and they’ll send you home in the dream vehicle of your choice with no hassle.

If you’re an automobile dealer, or manager, you wonder how people can actually believe all this nonsense. No money down financing for bad credit customers is just another fantasy. But the dealership down the street is constantly flooded with ups, while your guys stand around drinking your coffee and littering your used car lot with their cigarette butts. Meanwhile, that other dealership seems to be busy all day and night…why, they still have ups on the lot when you’re getting ready to close.

If this sounds like your dealership, then you probably never heard of Special Finance. Maybe you have, but you’ve also heard all the horror stories that go along with it. The “skuzzy “customers, their trashed trade-ins, bad down payment checks, and all the lies they tell to try and get approved for a loan. And the banks, oh the banks you have to deal with for these people. They take forever to fund a deal, if indeed the deal gets funded at all. Seems like the only guy to make any money on these deals is your “repo-man,” if he can find these people and get your car back! Why would anyone in their right mind want to subject themselves to this kind of aggravation?

But what if I could show you that, by ignoring these customers, you effectively eliminate up to half the customers within a 30 mile radius of your dealership. Imagine that over 50% of the people living around your dealership suddenly pack up and move overnight. Would you even have built it there in the first place? Probably not, but since you’re already there, why would you even think of excluding these folks from your dealership? Contrary to what you might think, this aspect of the business can be both profitable and clean, and these customers prove themselves time and again to be some of your most loyal customers ever. They regard you and your dealership as a friend who helped them out during some tough times, and will refer friends and family with great vigor, especially those in the same circumstances. They will service their vehicles at your service department, and will take advantage of your body shop if you have one. They will come back time and again and will continue to do business with your dealership for as long as you’ll let them. They are without doubt the best word of mouth advertising you can get!

So, who is your store in the grand scheme of dealerships? Do you openly embrace sub-prime customers, and make this business your main objective? Do your people run for cover when a special finance customer hits the lot, knowing that your F&I department has no interest in these customers. Do you dabble on the outskirts of special finance, doing only those deals which require little effort?

Research shows that, when it comes to Sub-prime or Special Finance (SFI), dealerships traditionally fall in to on of four categories. We like to call it “The Dealership Four Square”:

The Bold Dealership is just that. He’s known as the special finance king. All his advertising dollars go towards the sub prime market, and you can pretty well surmise that anyone driving one of his cars probably has a credit problem. The dealership caters to sub-prime business, and as such, good credit customers may be reluctant to go there. If a 750 beacon walks in the door, he probably made a wrong turn!

The Enthusiastic Dealership is willing to do Special Finance, but is typically not ready There is no pro-active marketing for Special Finance , thus the limited business is generated from , lot traffic,” Get ME Dones” and primary F&I turn downs. The F& I Turndowns are typical when the Sales Desk has a strong deal on a vehicle and is delivered to the customer on the Sales Desk’s “OK to SPOT”. These deals have been shopped to every primary lender with no success. It is at this point (often two days later) that the Special Finance Manager gets the deal and is left with the task of salvaging a deal that was never handled properly from the beginning. These stores see the potential for sub-prime but can’t figure out how the store down the street can deliver all their turn downs. They tend to take only the easy deals, and those that require some work usually get let out after the initial round of rejections.

The Necessary Dealership does Special Finance, but not consciously. The F&I manager knows something about sub-prime, and can get a deal approved with some effort. His pay plan typically does not compensate him sub-prime, so he pays little attention to it. His attitude regarding special finance is that these customers don’t deserve a loan, but when he gets them approved, he is the BEST! This dealership is concerned with the image that Sub Prime can conjure up. This dealership is not interested in the being known as a “Sub Prime Dealer”, and does not want to jeopardize his current customer relationships. This dealer is only interested in Sub prime if it could be done with only the banker knowing!

The Unwilling Dealership has no desire to be in the sub-prime business. This store is usually one of the top dealerships in the market, selling hundreds of vehicles a month. Most of his financing goes through his captive source, and they tend to buy so deep, many of what would be considered sub-prime at another store get done as primary in this store. Management’s philosophy regarding sub-prime is that it’s simply not worth the headaches, and the few extra deals a month do not make up for the previous nightmares that this store may have experienced.

What category does your dealership fall into?

DOES MY DEALERSHIP NEED A SPECIAL FINANCE DEPARTMENT?

You may already be in the Special Finance business and don’t even know it. If your F&I department is that good, you don’t hear a lot of complaining about the deal that couldn’t get bought. While it’s highly unlikely that your staff closes every customer that walks on your lot, odds are that you are probably selling some of these sub-prime customers to your primary sources. But we live in a world of maximums and super sizes, so why not have both on these deals?

We know that over 50% of the population surrounding your dealership has some kind of credit impairment. Why would you want to exclude that many potential buyers from your dealership? Even if you’re a mega-dealer doing hundreds of units a month, wouldn’t it be nice to have another 25 to 50 sales on top of what your already doing? Keep in mind that we’re not talking about abandoning the business you already have, but expanding it.

Remember, special finance customers aren’t just the ones who sit home and watch Jerry Springer all day, trying to figure out where they can cash their next welfare or unemployment check. They may be doctors or lawyers or any other professional who have just had a bit of bad luck. As the saying goes, “Bad things happen to good people.” These customers want to do business with a professional, not some fly-by-night operation they pass along the way. Additionally, these customers will provide additional business for your parts, service and body shop. And the referral business they can bring could be well worth it within the long run.

Remember, when everyone else is saying how bad business is, the quality of the customers coming into your dealership hasn’t changed, it’s the circumstances these people face that is different

1.The subprime mortgage crisis effects the your subprime customers the most!. Many of them are “victims” of these subprime mortgage loans and are unsure of what their mortgage payment will be when their rate goes up!
2.These same people that were banking on the equity in their home continuing to rise and many took out equity lines or second mortgages and now don’t have the equity left to support these loans.
3.The housing market is down, and many of the people who work in it are feeling the pain. The construction worker, carpenter, framer, electrician, plumber, etc. all were riding high when the new housing market was in full swing. Now, many of them, if they are still employed, have gone from 70-80 hour weeks making big overtime to 40 or less hours a week with no overtime. Income is way off, so many of them don’t have down payments available.

Remind yourself that now is when you can really shine. Most finance guys would walk away from this market because it’s too hard to do the business. Don’t be one of them.

Geoff Cohen is a seasoned auto professional, with over 30 years experience. He has done it all, from sales rep to F&I Manager, New Car Manager, Used Vehicle Manager, up to GSM and GM. He has also worked as an area sales manager for a major sub-prime lender as well as run his own BHPH and Auto Leasing/Brokerage company. He is the National Accounts Manager for Auto Lending Network and is a contributing author to several blogs about Special Finance solutions for auto dealers as well as F&I Magazine and World of Special Finance Magazine