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How to answer questions about financing and credit as a dealer

A new season is here, and many outdoor enthusiasts, including your customers, are ready to shift gears from snow-covered adventures to on- and off-road excursions. They may be looking to upgrade to the latest powersports equipment and accessories, but the total bill may be hard to swallow. That’s why many may turn to the dealership’s sales and service staff for advice on how to lessen the financial burden by taking advantage of available financing options.

Last fall, Synchrony released its ninth Major Purchase Journey Study, showing how financing has become more essential to buyers shopping for big-ticket items. According to the research, when asked if recent price increases have led them to seek financing options, 50 percent of consumers said yes. That figure is even higher, 63 percent, for younger consumers between 21 and 39. Moreover, the study revealed that 75 percent of major purchase shoppers are comfortable with financing through a retailer credit card.

As a dealer offering financing, customers will ask about the options available to them, and some may seek guidance on how they can improve their credit to secure the best terms possible. The topic of improving credit scores is undoubtedly new territory for many sales and service personnel, and while it’s best for customers to consult a financial expert, here are some tips you can share.

Adopt sound credit practices

It’s important that cardholders practice sound credit practices. Use the card regularly and make all payments on time. A good payment history opens new opportunities. For example, it can help a customer to secure powersports financing, such as installment loans to purchase units or credit products like Synchrony’s Outdoors credit card, which includes flexible payment plans, extended loan terms and more for accessories, parts and services.

Establish a strong credit history and credit utilization ratio

Strong history can also increase available credit, and as that grows, so can the total amount of revolving credit, which might include credit cards, personal lines of credit and home equity lines of credit. Strong revolving credit can result in a low credit utilization ratio, which represents the percentage of the credit limit that an individual is currently using. Be sure to mention that it only takes into account revolving accounts, such as those I mentioned above.

Credit utilization can be a major scoring factor in credit, and the utilization ratio of a person’s credit cards and their overall utilization rate are both important. Traditionally, experts have recommended that consumers strive for a ratio that’s no higher than 30 percent, but for anyone looking to secure a truly exceptional credit score, many suggest keeping that figure under 10 percent. In general, people should make their minimum payment on a card every month and then pay off the balance before the end of the billing cycle. This will help ensure a good credit utilization ratio.

For those cards that you are not using, the customer’s instinct may be to cancel them. Urge them to stop right there. Old credit cards can help their credit utilization. And while a new credit card can help their score, too many new accounts will also lower the average age of a customer’s credit accounts, which can adversely affect their score since higher averages are best. Equifax recommends consumers have two to three card accounts in addition to other forms of credit. Other experts say the number depends on the individual, spending habits, organizational skills and other factors.

Augment credit reports

There are also ways to augment the credit report. At Synchrony, we employ a proprietary technology, called PRISM, that analyzes a wealth of data in addition to the credit report. PRISM provides a more complete and accurate picture of a consumer’s creditworthiness. Using this technology, we have been able to extend credit to consumers who otherwise would have been denied.

At the end of the day, let your customer know that like preferences for powersports units and gear, each person’s credit report is different.

Whatever their score is, they can raise it by adopting some of the practices in this article. And as a customer’s credit score evolves, so will the financing options they can secure when making their next powersports purchase.

Susan Medrano is SVP and general manager of Synchrony Outdoors.

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