Carmel Financial Declaration
"We, the associates of Carmel Financial, in order to provide a high standard of excellence, empowered with responsibility, enthused with a positive attitude, do hereby commit to provide our merchants, clients, customers and fellow associates the best service, products and personal attention in the financial services industry."
Letter from the President
Dear Valued Merchant,
How many sales have you lost because your customer couldn’t get financing?
Perhaps the impact on your bottom line hasn’t been significant, so far. But soon it will be.
Fewer consumers are qualifying with primary lenders. Consider that more than 120 million Americans were identified as having “less than perfect” credit in a recent national survey.
As of 2005, there were more reported bankruptcies per capita than during the Great Depression. Even though bankruptcy filings have slowed in the wake of recent reform legislation, the growth of consumers with bad credit has not. In fact, it has increased significantly. Under the new bankruptcy law, unsecured debt that previously would have been discharged, remains as bad debt.
Divorces, layoffs, repossessions, defaults, unpaid health care bills (due to insufficient or non-existent insurance), credit card abuse and identity theft have contributed to significantly diminish the pool of customers who readily qualify for a loan from a primary lender.
Once a small minority, consumers whose credit applications are rejected by primary lenders are an expanding group that often includes individuals with solid, good-paying jobs.
So, if your customers rely on financing to afford your products, how will you keep sales from walking out the door?
There is a way to save both the sale and the customer by forging a partnership with a secondary finance company. A merchant can then secure financing for every single customer rejected by a primary lender.
Secondary lenders have been around for some time, however only a few have lasted nearly 40 years.
Here’s how secondary finance works. The lender reviews each customer’s financing application individually. An analyst then prepares a document stating how much the lender will pay for the sales contract. For example, if the price of the product is $10,000, the secondary lender may return a bid that covers 90 percent of that figure. The 10 percent reduction reflects the likelihood customers with a credit history similar to that applicant will default on their loans.
Regardless, with a reputable secondary lender, the merchant has the final say. They either can accept the bid and move forward with the sale or reject it and the entire transaction. Accepting the secondary finance bid, however, at least saves the sale and most of the profit.
After all, some profit is better than none at all.
As for the customer, reputable secondary lending companies treat them like you do – like people. Reputable secondary finance companies also charge interest rates no higher than those of primary lenders.
Here are some tips for choosing a secondary finance company that will boost your bottom line without complicating your business. Remember, if you aren’t offering your customers a way to buy your products, your competitor will.
• Look for longevity. You want to make sure the company you enlist is going to be around to back its commitments.
• Get answers to your questions. Assess how well a secondary lender answers your questions. Is the company responsive and sensitive to your needs?
• Seek flexibility. Secondary lenders must be not only willing, but able to effectively evaluate each applicant individually so they can find a way to help you make the sale.
• Choose your friends wisely. Don’t let a pact with a predatory lender or disreputable secondary finance company ruin your good reputation. Work only with secondary lenders that set fixed interest rates comparable to that of primary lenders.
A reputable secondary lender can be a win-win for everyone – for the merchant, for the customer and for everyone whose jobs depend on production and sale of your product.
Cordially,
Tracey Sheehan
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