As a water treatment dealer it is important to understand the trends – past and present, and how they can effect your business bottom line now and in the future.
Homeowners Are Borrowing
The Consumer Finance Protection Bureau’s (CDPB) December 2017 report showed that consumers are borrowing near the levels of those before the Great Recession. The Federal Reserve reported that the revolving debt balance level has reached $1.023 trillion nearing the end of 2017 which is up from April 2008’s report at $1.021 trillion. American’s have again embraced the use of credit to meet their financial needs in the decade since the collapse of the housing market and subsequent recession.
Consumer confidence is at an all time high and has been boosted by low unemployment levels, the stock market rally and government tax policy reforms.
Is this good for the water treatment industry? It depends on the outlook of both dealers and lenders and what we have learned from the recession a decade ago.
Before the Crash
Water treatment dealers who sold before the 2008 recession remember the easy access to credit that increased sales. House values were up and lenders were open for business. This allowed for multiple program options and competitive lender pricing as well as generous credit standards.
The water treatment industry felt the effects of the housing crisis immediately. Few financing options were left and sales plummeted.
The Market Today
In a reflection of the pre-recession boom, lenders today are competing for business and a variety of competitive financing options are available for water treatment dealers.
History is likely to repeat itself with increased credit standards and a raise in market interest rates as consumer debt levels reach a record high. The CFPB has stated intentions to review the use of deferred interest plans as they feel water treatment customers were being negatively affected by these plans. Eliminating the use of deferred interest plans would have a significant impact on the water treatment industry.
It is important to have good relationships with multiple lenders so you do not find yourself lacking program options as lenders change theirs due to the economy. Having at least a few lender relationships will help reduce the risk of being stuck without financing altogether.
It is important to remember that lender relationships are partnerships. Viewing lenders as disposable makes for an unhealthy market. Lenders rely on dealers providing them with accurate information and accurately representing program terms to customers. Not doing so increases delinquency for lenders and can directly impact future credit access. Dealers can help their lender partners make the best loan decisions by accurately disclosing all income on loan applications, submitting joint credit applications when possible and notifying the lenders of any information that may be relevant to making a sound credit decision.
It is also the dealer’s responsibility to ensure their customer understands the terms of the financing program offered to them. This means having fully trained sales representatives who understand how to explain important financing information to the customer without leaving anything out. Today’s buyer has easy access to review and complaint sites to express their dissatisfaction about any aspect of your business. A dealer risks unwanted negative publicity by not accurately representing the financing programs and terms.
The water treatment industry is strong. Lenders are feeling confident and their programs are reflecting that. However, the parallels to the environment prior to the great recession are evident. It is in the best interest of dealers and lenders to reflect on the past and ensure their actions today do not impact the long-term shape of the industry.
Partnering with Foundation Finance gives you the opportunity to create a relationship with a lender that has your best interest in mind. With competitive programs and quality underwriting, FFC is looking to give you more approvals and options for your customers. Whether you already offer financing or need to start, reach out to our Dealer Support team at 855-241-0024 ext. 5012 to discuss how this partnership can benefit you and build your bottom line.
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