Getting financing can seem like a daunting task no matter the nature of the loan. Powersports financing includes roadblocks that can make the process far more complicated than getting a standard automobile loan as there is far more risk to lenders involved. Picking the right dealer or loan providor to work with is one of the most important aspects to consider. you're going to essentially be in a relationship with the lender for the next few years and nobody enjoys a toxic relationship. In this article, we explore some easy-to-spot red flags to consider when deciding if the lender is on the up and up.
How is the online reputation of the dealer you're working with?
In most cases, you'll be dealing with a third-party dealer broker when financing in Canada as most power sports lenders do not offer to finance directly to consumers. There are a few things you can look into to ensure that the dealer you're working with is a good choice.
1. Online presence. Check their socials to see how active they are. If they have a LinkedIn with their staff or ownership listed, that is a major positive. Look at their website and see if it looks professional or thrown together. See if they are using a direct URL email and be cautious of "dealers" who are using Gmail or Hotmail accounts to collect your information.
2. Offline presence. Ensure that the dealer you are working with has an actual physical location. There are known scams with "dealers" operating out of fake addresses while working remotely. Be hesitant in trusting those who do not have a showroom that can be verified with photos as they may be middlemen who are looking to sell your information to true dealerships. They typically collect and store information in a haphazard way that may expose you to identity theft.
3. Previous Customers. Look for reviews on Google, Yelp, and Facebook to see how previous customers were treated. Keep in mind that fake reviews can be bought at a low price so do your due diligence in ensuring they are genuine. Some signs that a business might have fake reviews include poorly written reviews, reviewers on Google who have only one review, and reviews that seem to be left in blocks over a few days. Most companies will not have a review every day over a short time.
Online fake review companies will ask the business to write a blurb about products or services and include the names of salespeople. If you notice that every review in a short span has the same general idea and awkwardly uses the salesperson's name, it is likely fake.
Pro Tip: Reviews for the actual banks or lending companies are typically unreliable as customers who don't pay their bills tend to be the first to hit the internet to leave a negative review.
Does the lender charge for early payment or payout?
If the answer is yes - run. Even if you do not plan on making early payments, you do not want to get locked into paying the full interest amount prior. You never know when your situation might change and even the smallest in extra payments towards a loan can make a huge difference. Even if the dealer claims that they do not charge for early payment, be sure to double-check the loan terms in the documents themselves as this is the binding agreement. There is typically a section for "prepayment". In some cases, the wording can be complicated so ask the associate working with you to break it down.
Pro Tip: Extra payments towards the principal make a huge difference in the total interest you will pay. Simply making an extra payment every third or fourth month can save as much as 50% of the total interest cost over the term!
Does the company you're working with engage in high-pressure sales?
Working on commission can be cutthroat. Unfortunately, in most cases, this pressure can be passed on to buyers. High-pressure dealers typically hire their sales team out as contractors and, as such, making sales is the only way they can ensure income. Luckily, those dealers are thinning out and getting replaced by more modern sales tactics. Nowadays a reputable and trustworthy dealer will steer clear of these tactics and rely on positive relationship building with both their team and customers to drive traffic. If your salesperson is jumping down your throat every chance they get, you might want to consider whether making the sale is more important than actually providing you with good service.
Pro Tip: Many dealerships allow you to get pre-approved by applying online. This is a great way to see what your numbers look like before spending time in-person dealing with salesmen.
Does the company you're working with rely on dishonest "buzzword" advertising to draw in customers?
Guaranteed financing. Lowest rates in Canada. Everyone approved. All buzzwords sound great in theory, but the reality might be completely different. Nearly every company in Canada that offers financing uses some or all of the same lenders. The very few that offer in-house programs typically have extremely poor terms for the buyer.
Pro Tip: Find a dealer who has access to numerous lenders in one spot and request to them that they limit the credit checks to two maximum.
Is the company you're working with up-front about the fees that they charge?
Nearly every company out there claims to be transparent and charge no hidden fees, however, do not disclose their fees on their website. Furthermore, when reaching out to these dealerships they will usually push you to apply before giving out any information at all. If the dealership is making false claims and forcing you to apply before giving you an idea of what you will be charged, it may be best to find another option.
Pro Tip: Most dealers will mask their fees in their payment quote right up until the point you have to sign the documents. Ask for a full breakdown the moment they quote you a payment.
With the powersports industry seeing continuous year-to-year growth, the number of options out there to pick from can be daunting. While these tips focus on snowmobiles, they can also be applied to ATV financing, motorcycle loans, or even RV Trailer financing. By using the tips in this article, we hope you'll be able to narrow down the options to get you set up for financing so you can shop for a used snowmobile with confidence!