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Qualifying your customer for consumer financing

Steven Brown has been in the power sports business his entire life, and has worked as a dealer principal, Suzuki Canada sales representative, broker and business manager. At Suzuki he was recognized as one of the company’s top selling Canadian salespeople. As a broker in southwest Ontario he built a business from zero sales in 2003 to $5 million/year by 2006. Today, as a Crelogix Power Products District Manager Mr. Brown continues to work with dealerships, helping them get the most out of consumer financing.

I have just signed on to offer consumer financing at my business. What advice do you have about offering it to my customers?

Every month I talk to dozens of Canadian businesses new to consumer financing who are looking for ways to make it work better for them. Below are 6 simple tips that I have picked up along the way that will guide business new to consumer finance.

1) Work out what the customer can afford
The first and, one of the most important questions I ask my customers are, “What can you afford?” Many customers prioritize getting a low payment on a lower end product; working with them to establish what is affordable for them on a payment plan not only opens up their purchase options, but will also increase your chances of up-selling.

2) Simple questions can help
By asking your customers a few simple questions during discussions, you may be able to gauge their credit limit. Questions like, do you own your own home, or do you have monthly payments on a vehicle can help direct you and your customers to suitable consumer financing options.

This can be a very personal question, so be polite when asking and explain how it is an effective way of assessing their financing options. A simple and effective method of understanding a customer’s likely credit limit is to ask what the highest credit limit they currently have. This is a very personal question, and sensitivity around this is important, be sure to explain that these questions will assist you with assessing the best financing options for them. Asking any of the above questions is not about judging who can and cannot get credit, but rather to help you get an understanding of what consumer financing options are suitable for your customer.

3) Ask difficult questions upfront
Filling out loan applications can be time consuming. Asking the difficult questions up front saves both you and your customers time. The following questions can help you avoid wasting time filling in loan applications with no chance of approval: Have you been bankrupt, when was it and have you been discharged or re-established credit since, and do you have any collections.

4) Be wary of lay-downs
A lay-down is someone who agrees to buy too much too easily using credit. Be wary of this type of behavior as such customers often have poor credit. Generally, those who are most wary about using credit are those who will get the most from it. There are many people who have good credit history, and thus will have simpler approvals?

5) Lead with credit
When discussing payment options with a customer, always lead with credit.
Many businesses will mention consumer financing options last, only after payment methods have been asked. However, those who qualify for credit are likely the same people who were planning on paying with cash. If you lead with credit suddenly your customer can afford more than they expected, helping them get everything they want while boosting your revenue.

6) Don’t get overwhelmed early on
I have talked to many dealers who have experienced several early application rejections and encountered a number of customers who should not have been seeking credit and were declined. This happens. Don’t let it overwhelm you. Many smaller businesses I work with who are new to consumer financing tell me how this has put them off of consumer financing. I advise them to persevere because it will pay off in the long run. Good consumer financing partners will help you navigate these hurdles; providing services such as business support and ongoing training. Never be afraid to contact your financing provider to access these services. Most will happily help you, after all their business depends on you selling with their financing.

Ultimately, your goal is to ensure that you are comfortable offering suitable consumer financing options to your customers. They will not only be appreciative for your efforts but, your efforts will lead to more business opportunities creating a win-win for both your business and your customers.