Educating consumers on financing is important every month, but dealers should prioritize it during December because of increased consumer spending habits and lenders tightening their underwriting, Chase Vance, regional operations manager of Freedom Powersports, told Powersports Finance.
“We train very heavily on getting money down and educating the buyer, because it’s always better for the buyer to put money down in this time of year,” Vance said. If an application is declined, the dealership might be able to rehash the deal by increasing the down payment amount.
“We go back to the consumer to say, ‘Hey, just like what we talked about a minute ago, they want to see 10% down,'” Vance explained. “You just have to educate the buyers as to why they’re doing that — which we do throughout the year — but around this time it’s crucial that you do that.”
It’s typical in the December season for lenders to tighten underwriting because consumers are spending more during the holidays. Consumer spending climbed 0.4% in December 2017, the biggest increase in household buying since 2011, according to MarketWatch. And with fewer applications coming in the door, lenders might give deals a closer review, Vance added.
Also, the Federal Reserve has raised interest rates throughout the year, further pushing lenders to mind their underwriting, he said. To that end, if a consumer fails to get the interest rate or monthly payment desired, it’s important to emphasize to them that a larger down payment translates to paying pay less interest over time and speeds the customer’s ability to build equity in the vehicle, Vance said.