Rv Finance Question

[Excella3287]

You might find this as an avenue and by-pass the dealer network and deal directly........best of luck


BREAKING NEWS
Priority One Offers Turnkey F&I Retail Services
Joe Bohn
RV Business
Tuesday, March 10, 2009

Tight credit and a deepening recession are spurring one surprising trend in RV financing: the outsourcing of dealerships’ finance and insurance (F&I) operations.

Priority One, a St. Petersburg, Fla., provider of turnkey full-service F&I services to over 600 marine and RV industry dealers, saw a 342% increase in dealer sign-ups during January and a 540% increase in February.

The company, over 20 years old, was acquired in 2007 by RV manufacturer Forest River Inc., Elkhart, Ind., a wholly-owned subsidiary of Berkshire Hathaway Inc. Being affiliated with Berkshire Hathaway doesn’t give Priority One easier access to retail RV loans, but “it certainly gives us more credibility in both industries we serve,” says Lisa Gladstone, the company’s president and founder.

Priority One’s volume of retail loan application business also provides it with a degree of leverage with banks and financial institutions, which an individual dealer would be hard-pressed to match. “All our business is sent in under one roof,” says Gladstone. “Rather than a dealer doing five transactions a month, we’re working with businesses that represent $1 billion worth of retail sales. We have the same staff (52 people) talking to the same lenders every day. It’s part of what we do all day long to get the unit delivered and generate extra profit for the dealership.”

After a dealership has landed a customer, Priority One handles all the closing and selling of the finance opportunities associated with the deal. “The dealer can fax in the purchase agreement on a fax machine or enter it online to turn it over to us for a credit application,” says Gladstone. “Then, we call the customer, and start working on the deal.”

As a turnkey operation, Priority One runs credit checks and discusses financing options with a dealer’s customer, helps the dealer structure loans to the selling unit and customer’s credit qualifications, lines up lenders, sells insurance and service contracts – basically doing everything that a dealers’ business office/F&I operations would handle.

Along with high volume leverage, Priority One’s appeal is in helping dealers cut costs, getting access to highly trained people and, frequently, increasing their F& I profit on each deal, Gladstone says.

Due to the seasonality of the RV business, for example, it’s more difficult for RV dealers (than car dealers) to get topnotch F&I people and keep them during the slow selling season. Even large dealers, with multi-locations, often can’t afford a business manager at each location, Gladstone adds.

Priority One handles dealers of all sizes, the average being in the $4 million to $7 million sales range. “That’s just where we are with our average size. It’s a group of dealers that understands the need to protect every customer in the purchase in making a purchase, hold their hand, shop lenders and understands the need for additional profit,” Gladstone says.

The company’s earnings are based on whatever extra profit it generates on a unit. It earns 49% of the profit generated by the finance reserve a dealership gets from lining up its own lender, for example, and/or from the sale of a service contract. All the money from the transaction goes directly to the dealership, which, in turn, then pays Priority One, rather than it collecting any money from the lender. And, “unless we help get the unit delivered and generate extra profit from the finance reserve or up-selling things like insurance or service contracts, we don’t get paid,” says Gladstone. “We pay for overnight costs, the creation of the website. The onus is on us to create value.”

The company’s dealer agreements can be terminated at any time. “We believe in success and results that speak for themselves,” says Gladstone. “We want a profitable partnership and not one that forces anything on the dealer. Our agreements simply spell out the dealer’s responsibility and ours, and if it doesn’t work, let us know, and we’ll part friends,” says Gladstone.



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[Ganaraska]

Try your local bank or credit union. They should give you a good rate as the loan is secured by the trailer.

If you can afford to pay cash it might be a better investment than the stock market.

[metilling65]

Excella, what an interesting article. So, what constitutes the "slow season" for RV's? I'm assuming that it is fall and winter. If I want to purchase a new AS, should I wait until the fall, assuming that I am willing, for a better deal?

We've sold our house in upstate NY with the idea that the economy isn't going to improve anytime soon. We're going to rent so that we can be flexible if my husband's business can no longer generate income and we have a nest egg that can presumably set us up elsewhere. It's a nest egg that we wouldn't want to touch, so we would finance the AS and live in it for relocation purposes. Plus, it's a great way to explore the country and see just where our family of 4 want to end up.... I'm thinking a red state is the way to go....

Thoughts on best time to buy new?

[doug&maggie]

Originally Posted by gc24

Maybe I am looking at this all wrong. I am buying it Not as a home to live in and I am retired. I might as well pay for it outright and forget the interest charges and hassle of the whole thing.

We'd be interested in knowing what you decided to do here. Otherwise debt-free, we did not hesitate to finance our Interstate in 2007 and haven't regretted that for a moment.

We recently re-financed through a credit union at 5.5%, dropping our loan by several years. The banks couldn't come close to this rate, and "joining" the credit union required $25 into a savings account there, period.

[dstalzer]

It is easy to join a credit union now days without the need to be associated with any particular company or group. I was able to get a 4.55% loan for 66 months on a used 2005 Classic at my local credit union.

[Aage]

Logic says that if you pay more for interest (on the consumer loan to buy the trailer) than you would earn on leaving your money in whatever instrument it is in now, spend the cash.

The only way I could imagine you getting a loan that would make sense is a "sweetheart" loan from a family member at zero or 1-2% interest.