Dealer Finance… How important is it to your dealership? It’s no secret that the Australian Automotive Industry has faced heavy criticism in the past due to finance offered to customers. If used correctly Dealer Finance is a powerful tool that can maximise sales and increase profits. If used incorrectly you may face heavy penalties and loss of your dealer license.
That brings us to the question? How can Australian Motor Dealers close more finance deals? Unfortunately, there is no simple answer. With many Australian customers still carrying a bad taste in their mouth when it comes to dealer finance, the first and most important thing your dealership needs to do in order to maximise finance deals is change customer perception.
It’s no secret that Australia as a nation is awful at financing vehicles at the time of purchase. Go Auto News just reported that 20% of Australian Car Buyers use Dealer Finance compare this to the US where upwards of 80% of car buyers use dealer finance. With that being said there are still endless opportunities available to maximise finance conversions in Australia in 2022. Aussies are still looking for finance, but currently they are looking for it through other alternatives. This is where we need to change the negative perception.
We get it, changing a common perception is easier said than done, but it’s not impossible. After the banning of Flex Commissions in 2019 on the back of a Banking Royal Commission into car dealership financing, the new finance regulations make it clear that dealers cannot offer rates themselves. The first way to change a change a perception is to understand and convey to the customer the new finance methods and how they differ to the old negative processes.
Current Compliant Dealer Finance Options
In 2022, Australian Motor dealers have 3 options for dealer financing.
Option 1 – Your Dealership needs to apply and be granted as an authorised Credit Representative of an existing asset finance broker. Using this option, dealers can provide customers with a credit assistance/ financing option like the old process but acting under the accredited finance broker.
Option 2 – Your Dealership needs to apply for your own Credit License. This option is very difficult, costly, and subject to approval. What makes this option so sensitive for Motor dealers is ASIC places further scrutiny on licensees instead of individual representatives. Your Dealership will need to pay to apply for a license which is subject to approval based on the required criteria.
Option 3 – Refer Finance Deals. For your dealership offering a referral financing solution is the safest, fastest, and easiest option available under the current compliance laws. A referral option is when your dealership refers a potential customer to an accredited finance company for them to do all the heavy lifting. With this option your dealership earns commission if the deal is closed.
Integration with EasyCars
Using EasyCars, Dealers can offer either Option One or Option Three for Customers. Integrated with our accredited finance provider Drive On Finance, dealers can transition the manual finance process to an automated one click process. The benefit of submitting finance deals through EasyCars is it removes your need to use a broker, minimises your workload and increases conversions.
Time is money! Offering a referral finance option through EasyCars automates both your process and your customer’s process. In the click of a button your customer can submit finance applications, receive approval, and have money in the bank within 60 minutes! For your dealership, the benefit is you don’t need to waste time completing finance quotations or speaking with your broker – this will save you hours of time every week.
What makes this process so beneficial for your customer is customers receive the best and cheapest loan option from over 40 finance companies based on their credit score and application. The benefit for your dealership is you receive a hefty commission from the finance company for your referral. All you need to do is sit back and watch the commission come in!
An Automated process won’t only speed up your finance process but it will help you build trust with customers. During your sales process, explain to the customer how the new finance process works, let them know that you aren’t using a traditional broker and show them how the new process helps them receive the cheapest finance options.
Motorists are still looking for finance, they are just applying for finance directly through providers that are available through Drive On and EasyCars! It’s all about changing the mindset of what dealer finance is. The faster and easier the finance process is for customers, the more deals you are going to get, it’s really that simple.
The potential for finance at your dealership is endless. Car Buyers are still looking for ways to get finance, but you need to make them feel comfortable getting it with you. To maximise your finance conversions, you need to offer a fast, cheap, and easy finance options for customers. Transitioning your finance process to technology will help your dealership close more deals and more importantly grow greater customer trust.
We hope you enjoyed this article. To read more articles like this visit the EasyCars latest news section here.
EasyCars by Jeal is an Australian, web-based, dealer management system that automates the buying and selling of motor vehicles. Using the latest technologies, EasyCars removes frustrations experienced at the dealership and opens your doors for greater growth.
EasyCars features include Simple Stock Management, Automated Advertising, Integrated Accounting, Government Compliance, Business Reporting, Reviews Management, Dealership Websites and more.
To learn more about EasyCars Dealer Management System and to arrange a no-obligation free demo, contact us today on 1300 473 744 or submit the form below.