Summer is a prime time for auto sales. New college graduates, new hires, and recent empty nesters are likely to be in a vehicle transition phase. While most people go through a dealership for their auto purchase, many also consider selling or buying their vehicles through a private sale.
As a lender, how does the financial institution support these do-it-yourselfers? Now is a great time to educate the staff and customers on the pros and cons of trading in a vehicle versus selling it outright.
In the auto finance section of the website, provide resources on what to expect, both in the dealership and in private sales. Remind customers that securing an auto loan for a vehicle purchased at a dealership is much more comfortable than a personal loan for a private sale. All the buyer has to do is apply for financing, and the dealership and lender take care of the rest. In a private sale, the buyer has to work more closely with the seller to complete all the due diligence around inspecting the vehicle and transferring the title paperwork, in addition to coming up with the funds.
Be sure that customers who choose to purchase a vehicle via private sale have checked sites like Kelly Blue Book to get an estimate of the vehicle’s value. Also, inform them of the benefits of auto loans, which can only be tied to cars sold in dealerships, versus personal loans.
- It’s easier to qualify for an auto loan because it uses the vehicle as collateral.
- The interest rate usually is lower on auto loans.
- Personal loans tend to have more fees associated with them.
Individuals who choose to sell their vehicle in a private purchase arrangement believe it gives them a better opportunity to get more money for it. However, the process can take more time and energy. After all, in a private sale, the seller must schedule test drives, negotiate, complete all the paperwork, and secure and transfer the title. These are details many sellers forget. In addition, setting a price based on Kelly Blue Book value, managing the title, and the financial aspects of a sale may be unfamiliar territory.
Lastly, don’t forget about compliance! Is the buyer offering a bank check or wanting to finance? What should the seller do if they receive cash for more than $10,000? What qualifies as cash? They need to know that information in addition to the standard financial aspects of selling a vehicle. These details are good fodder for a discussion with your customer wishing to enter a private sale agreement.
It’s surprising just how few consumers truly understand the intricacies of buying and selling vehicles. Lenders play a valuable, consultative role as they walk these individuals through the do’s and don’ts of private selling, and the benefits of skipping the hassle and shopping at a dealership instead. This consultative role also gives you the opportunity to secure financing before customers shop around, and create stronger customers relationships. Check out EFG Companies for more information.
Source : AutoFinanceNews
