Issue link: https://read.dmtmag.com/i/316641
10 • May 26, 2014 • Powersports Business FINANCE www.PowersportsBusiness.com deal. A co-buyer usually needs to a relative, or someone with the same address. Explain to each buyer at that time, that each will be responsible for the loan, even though the buyer might be the driver/user. Sometimes the buyer and co-buyer need to change places on the bank contract and title; that does not change the responsibilities of each. Once the finance manager has received the "calls" from the bank, he or she must now determine which bank to use. Some banks pay the dealership up to 2 percent of the sale price as a flat fee for signing out a customer at the bank's buy rate, other banks may pay up to 2 percent in reserve to the dealership for mark- ing up the rate. On the deal folder, the finance manager should discretely write what each "call" was from each bank. Also document whether a manual "review" with any banks were required to get to a certain term. It's a rea- sonable expectation that if a "call" was made by a bank after "review," that bank most likely should earn the contract. The finance manager must now create a win/win situation and pres- ent a rate that the customer is willing to accept. MENU SETUP Determined Information: The customer usu- ally keeps his motorcycle at least five years, and drives it to work weather-permitting. At work there is no shelter for the motorcycle. Road construction is a constant in his state, with plenty of potholes and construction sites. On weekends, the customer's 21-year-old son takes the motorcycle for a spin occasionally. The customer only uses his credit union for loans, even for his home loan. Middle aged with a few existing loans, the customer could come up with additional money down if required by the bank. The customer has a 720 beacon score, and with accessories his price including taxes is now 115 percent of NADA. The customer's credit union offers 2.99 percent interest. By matching the credit union's rate of 2.99 percent, the finance manager is able to get a base payment of $370.96 on a loan amount of $20,650 after a rebate of $1,000, fees and taxes of $1,450 and accessory purchases of $1,400. In this case it's not the payment that is important, but the amount financed. Per the bank's guidelines, the sell price must be a maximum of $19,000, or the down payment can be increased to $1,650. After adjustments, the payment becomes $341.32. With all this information, the finance man- ager is ready to load the menu. Many menu systems integrate directly with DMS and even CRM systems. Information sometimes only needs to be entered once, and then it can be saved along with the entire deal. The menu should clearly specify exactly what is being purchased and what is being declined. Any printed menu should be kept with the deal for seven years, along with all the rest of the paperwork. It is not uncommon for customers to come back after looking at their paperwork a few months later and swearing that they never purchased GAP or a service contract. The menu is the first place to look if there is ever a question. Here is the base payment information that should be documented on the printed menu: Sell price: $20,200 Down payment: $1,650 Interest rate: 2.99 percent Term: 60 months Base payment: $341.32 Any trade-in would have been included in the down payment section. If any of the base information is incorrect, the finance manager will know immediately, as that is the first thing he or she will review before getting into the presentation. CHOOSE THE MENU SPECIFICS Extended Service Contract: Five years, exclu- sionary coverage, $0 deductible — $1,700 The Extended Service Contract pays for mechanical failures once the manufacturer's warranty expires. It not only pays for the repair of the vehicle but also includes rental, roadside and/or towing, and travel reimbursement. GAP: Five years — $795 GAP pays the difference between what you owe and what your vehicle is worth in the event of a total loss. Tire/Wheel/Roadside: Five years — $595 Tire & Wheel pays to repair or replace your tire and wheel if necessary if damaged while driving under normal conditions Appearance Protection: Five years — $795 Appearance Protection not only protects your vehicle from oxidation and fading, but also tree sap, bird droppings, fall out and other environmental hazards. It also makes your vehicle easier to clean. The single most important element to the menu is a place for signatures, clearly illustrat- ing that the customer has declined the options or accepted some or all of them. Even with just these four optional prod- ucts, the finance manager can place them in columns, ranking from Premier or Advantage, down to Standard or Base, include pricing and benefits, while giving the customer some choices usually quoted in payment terms at the bottom of each column. The products and terms were chosen by the finance manager based on all the information he or she gained from the deal; other options or terms might come up during the menu presentation. The menu presentation itself is the closing of the deal, many times the single point in time during the sales and finance process that will make or break the profitability for the store. My next article will focus specifically on the menu presentation. PSB Brian Gallmeier, founder of Income Develop- ment Partners, uses his powersports experience at the retail level to train F&I departments. He can be reached at bgallmeier@charter.net or 612/616-8611. GALLMEIER CONTINUED FROM PAGE 9 www.PowersportsBusiness.com FINANCE Powersports Business • May 26, 2014 • 11 Wells Fargo Securities has initiated coverage of BRP's stock with an "outperform" rating, according to a research note provided to Pow- ersports Business by Wells Fargo Securities analyst Tim Conder. "We believe that BRP is positioned to gain share within the powersports industry recov- ery, driven by (1) operational excellence, (2) optimizing U.S. dealer coverage, (3) enhancing dealer/consumer touch-points, (4) the filling in of product whitespaces, and (5) acceleration of international sales," Conder reports. Conder goes on to write that the "powers- ports industry appears well positioned for con- tinued recovery, given (1) improving economic metrics, (2) clean channel inventory, and (3) new/used market dynamics all lifting new unit FOREIGN CURRENCY EXCHANGE 5/2/14 1 Month Ago 6 Months Ago Year Ago Annual Price Price %Change Price %Change Price %Change High Low Australian Dollar 1.08 1.08 0.2% 1.07 -0.5% 0.98 -9.6% 0.97 1.15 British Pound 0.59 0.60 1.4% 0.59 -0.4% 0.64 8.8% 0.59 0.67 Canadian Dollar 1.10 1.10 0.6% 1.09 -0.2% 1.01 -8.1% 1.00 1.13 Euro 0.72 0.73 0.7% 0.72 -0.4% 0.76 6.1% 0.72 0.78 Indian Rupee 60.21 59.80 -0.7% 60.17 -0.1% 53.86 -10.6% 53.86 68.14 Indonesian Rupiah 11,523 11,293 -2.0% 11,517 0.0% 9,737 -15.5% 9,730 12,260 Japanese Yen 102.25 103.72 1.4% 101.93 -0.3% 98.02 -4.1% 94.22 105.11 Malaysian Ringget 3.27 3.27 0.1% 3.25 -0.4% 3.05 -6.6% 2.96 3.35 Phillipine Peso 44.50 44.88 0.9% 44.32 -0.4% 41.06 -7.7% 40.83 45.40 Singapore Dollar 1.25 1.26 0.7% 1.25 -0.4% 1.24 -1.4% 1.23 1.28 South Korean Won 1,030.30 1,056.55 2.5% 1,030.30 0.0% 1,101.55 6.9% 1,030.30 1,161.35 Taiwan Dollar 30.14 30.28 0.5% 30.13 -0.1% 29.56 -1.9% 29.36 30.59 Thailand Bhat 32.37 32.40 0.1% 32.37 0.0% 29.43 -9.1% 29.38 33.13 Note: A positive percent change reflects a weakening of the U.S. dollar and a strengthening of the foreign currency. Wells Fargo now covering BRP P09x11-PSB7-Finance.indd 10 5/14/14 2:02 PM