RV Financing-Shotgun Approach? What is it?
RV Financing-Shotgun Approach? What is it and why recreational brokers and dealers should not do it.
Dealers and brokers who shotgun credit applications looking for the best deal may actually damage their reputations and their customers’ credit scores
In financing, there simply are no shortcuts. An RV dealer may assume sending a customer’s credit application for RV financing to many lenders, otherwise referred to as “shot gunning,” will enable him to secure a quick approval.
“Shot gunning” a credit application often happens for several reasons. For example, a dealer may not be aware of its consequences;
As an overview, the practice of “shot gunning” credit applications is not new. In the past, lenders recognized it as an expected course of action for dealers simply because funding ratios were not scrutinized to the great extent they are today. Times have changed, but unfortunately, the practice of “shot gunning” credit applications still occurs. For that reason, dealers should realize how this practice can negatively impact their business and their customers.
How it kills customers credit scores
A dealer or broker who “shot guns” a credit application may turn a potential customer into an angry individual once they discover their credit score was lowered by numerous inquiries. Most times every time a customer’s credit is pulled it lowers their credit 3-5 points. This occurrence is also likely to damage a dealership’s reputation or a brokers reputation — one unhappy customer will usually share his story.
Dealers or brokers who shotgun credit applications looking for the best deal may actually damage their reputations and their customers’ credit scores
When a dealer chooses to utilize an F&I professional or an F&I managed services provider instead of relying on the “shot gun” approach to credit approval, he gains the assurance in knowing every loan application processed has the best chance to be approved for funding.
A skilled F&I professional evaluates all aspects of a customer’s application in great detail, including any “special circumstances”
Relationships help “work the deal”
When a dealer submits his customers’ credits applications for RV financing to an experienced F&I professional, he will inevitably benefit from well-established relationships with lenders. In addition, a skilled F&I manager or F&I managed services provider can thoroughly understand the specific requirements of each lender that are necessary to “work the deal.” Because F&I professionals work with lenders on a daily basis, they are very familiar with their specific guidelines and programs, which helps support the approval process.
In today’s competitive retail RV environment, financing is a quality game, not a quantity one. One of the most effective ways to avoid “shot gunning” credit applications is to utilize the services of an experienced F&I professional who has the ability to gain approvals, deliver more units and boost customer satisfaction for your dealership.
Targeting booking ratios
In today’s lending environment, a high loan funding or booking ratio for a dealer is a crucial component to the success of his customers’ credit approvals. “In reference to “shot gunning,” all of the top recreational finance lenders monitor key dealer performance ratios, such as booking ratios (number of applications booked versus received),” “Dealers with higher booking ratios have demonstrated their desire for a relationship with a lender.
This improves efficiencies for the lender and gains credibility for dealers when they are negotiating to put a more “challenged”
In addition to sabotaging his relationships with lenders, when a dealer chooses to “shot gun” credit applications, his customers’ credit scores are lowered each time a lender views their credit report. Few consumers today are in the dark about their credit rating. In fact, many of them are extremely savvy about what is on their personal credit report and may even be notified by credit monitoring services that their credit report was pulled.
Southeast Financial is an F&I managed services provider, serving the recreational industry for over 14 years. Contact them by phone at (866) 900-8949 or visit them online at
At Southeast Financial, we specialize in-
* RV financing
* motor home financing
* boat financing (http://www.southefinancial.com)
* horse trailer financing (http://www.southefinancial.com)
* motorcycle financing (http://www.southefinancial.com)
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At Southeast Financial, we specialize in RV financing , motor home financing, boat financing, horse trailer financing, and motorcycle financing – nationwide
Page Updated Last on: Oct 24, 2011