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Finance & Insurance Best Practices for Commercial Equipment Dealerships | TRNSACT
Equipment dealers that provide customers with excellent financing and insurance options improve their margins, add value for their customers, and improve salesperson efficiency. Without these offerings, they are leaving money on the table and neglecting the enhanced customer experience that will continuously bring buyers back.
Reasons for Implementing Finance & Insurance
The reasons for implementing both services within a dealership are tremendous, if not transformative. Dealers benefit from the following:
- Control and protect the sale: In-house financial services help protect deals as the dealership has control and visibility over the entire application process. When a customer relies on an outside lender, dealerships are burdened with calls for status updates, delays in financing approvals, and a significantly increased chance of losing the sale.
- Increased profitability and margins: Finance and insurance services bring additional revenue opportunities to dealerships. Marking up these services typically increases margins by 1% to 2%.
- Enhanced customer satisfaction: Any organization that offers a full-service experience has tremendously higher customer satisfaction numbers and a solid competitive advantage. Streamlining the process for financing and insurance makes all the difference and builds long-term customer relationships.
- Standardized sales process: When finance and insurance services are offered, the entire sales process is standardized from start to finish. The sales team follows best practices to advance through the process without deviating from waiting on outside services. This streamlined process gives them back more time to sell.
- Stay compliant: With secure technology, the dealer has more control over sensitive customer data by eliminating compromisable media like paper or information transmitted over email or fax. Dealers eliminate compliance issues and the risk of legal exposure from data breaches.
Best Practices for Finance & Insurance
The offering of finance and insurance options has best practices to follow that optimize the customer experience, help ensure the sale’s completion, and make the process efficient.
Establish a reputable lender waterfall
When looking for lenders to add to dealership finance offerings, it’s crucial to establish a waterfall of reputable lenders. A waterfall offers multiple lenders that serve customers’ specific financing needs from the first, second, and third options as needed for approval. Where one lender may be traditional bank financing, another might be appropriate for customers with low chances of approval for a conventional loan.
Prequalify prospective buyers
When starting the financing process, running a commercial credit report through providers such as CreditSafe is an excellent guide to the type of lenders to use. As owners guarantee the financing, a personal credit check via a soft-credit inquiry through Experian, Equifax, and/or Transunion is also essential.
Once the creditworthiness of prospective buyers is known upfront, valuable time is saved, and the sales team will go on to beat expectations.
While offering a subsidized financing program to a customer with weak credit can be uncomfortable as it means an increased payment over traditional lending, customers will typically be aware of their credit and appreciate having financing options.
Digitize credit applications
Credit applications performed through the Internet or an app offer efficiency, usually returning results nearly immediately. The results of processing through digital applications tremendously increase customer satisfaction and move the sales process forward due to improved efficiency.
Present financing and aftermarket offers digitally and efficiently
Presenting limited options from manually prepared finance documents wastes the valuable time of sales teams and customers, tying up deals and taking the time better spent selling.
Customers love options, and the ability to present all available financing programs, including different terms, rates, payments, and zero down payment options, delights them. They get to select what works best for them, given their unique needs.
Prioritize data security
Media like paper is inherently insecure and can potentially expose sensitive customer information, whereas customer information transmitted over secure and encrypted networks is very safe. Traditionally, financial institutions utilize 256-bit encryption to protect sensitive data.
To provide an idea of the security of 256-bit encryption, it would take the most powerful supercomputer now available longer than the universe’s age of 13.8 billion years to crack the encryption.
Technology doesn’t just result in efficiency, enhanced customer satisfaction, and control of the sales process. A dealership utilizing the best technology realizes greater brand value and more referrals, and it is a tremendous competitive advantage.
For a growth-focused dealership, the utilization of technology isn’t optional.
How Technology Supports Finance & Insurance Best Practices for Equipment Dealers
Dealers need to be faster to adopt technology, especially when offering in-house finance and insurance options, or they miss opportunities for profitability growth, more significant sales volumes, and enhanced customer satisfaction.
Technology not only supports finance and insurance best practices but elevates them.
- Technology provides an F&I easy button: Utilizing technology, the days of an extended application process, long approval times, and multiple applications end.
- Minimize costs of building F&I departments: Tech-enabled F&I departments operate more efficiently. When F&I departments are tech-enabled, much more is accomplished with much less time, lower personnel requirements, and reduced infrastructure expenditures.
- Provides more lender options: Customers love options, especially when they find the match for their unique needs. Additional options also move the sale forward and enhance the customer experience with instant pre-qualification from a single application.
- Increases sales velocity (prequalifications, streamlined processes): When F&I processes are not handled in-house, the wait for deal completion might be extended for days and at risk of being lost. Non-tech-enabled internal F&I operations also extend the time to deal completion by hours or days. Instant prequalifications, quick approvals, and streamlined processes give salespeople time to do what they do best, sell more.
- Reduces liability: Mishandled sensitive customer information exposes a dealership to high legal liability. Strong encryption of customer data ensures data safety and significantly reduces liability concerns.
Growth Focused Dealers Need Tech-Enabled F&I
The tremendous advantages of tech-enabled in-house F&I offerings are clear. A dealership’s ability to grow revenues, increase customer satisfaction, harness greater efficiency, and close deals faster are undeniable. A dealership’s competitive advantage is offering a streamlined application process with options that best suit customer needs.
Dealerships realize very significant benefits when they integrate Dealer Credit Resources from Trnsact as part of their sales and finance operations. One hub unites equipment dealers, lenders, and buyers. A single secure application provides instant prequalification and customer credit profiles and returns financing offers from lenders the dealer has added to their waterfall.
Dealers using Dealer Credit Resources optimize all of the benefits of tech-enabled F&I. See the difference F&I technology will make for your dealership. Schedule a demo today.
At Trnsact we are transforming the way construction equipment dealers and lenders work together. Book a demo with a construction account manager to see how our platform maximizes dealer sales conversions with a turnkey solution that enables:
- Accelerated closing times
- Increased margins
- Better customer experiences
- Industry-leading compliance and security