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  • Writer's pictureVision Management

Rising Interest Rates and Your Customers: Turning Challenge Into Opportunity!

As automotive and RV finance industry experts, we understand the impact that rising interest rates can have on both dealerships and customers. With interest rates on the rise, it's important for dealers and finance managers to be prepared to discuss these changes with customers in a legally compliant manner, but also in a way that provides increased opportunity to the finance department for product sales and cash conversions.

First and foremost, it's important to be transparent with customers about the impact of rising interest rates on their loans. This means providing them with a clear and documented base payment disclosure, explaining to them how interest rates affect their monthly payments, and the total cost of their loan over time. It's also important to provide customers with information about their options, such as refinancing or choosing a different loan term, to help them make an informed decision.

When discussing interest rates with customers, it is critically important to avoid making any false or misleading statements. This includes avoiding statements that could be interpreted as a guarantee of a specific interest rate or payment amount or any perceived "quid pro quo" of product for rate discounts. It's also important to avoid making any statements that could be seen as discriminatory, such as offering different interest rates based on a customer's race, gender, or other protected characteristics.

To ensure continued legal compliance, dealerships and finance managers also need to be familiar with relevant and updated laws and regulations governing the auto and RV finance industry. For example, the Truth in Lending Act (TILA) requires lenders to disclose certain information to borrowers, including the annual percentage rate (APR) and total finance charges. The Equal Credit Opportunity Act (ECOA) prohibits discrimination in lending based on a borrower's race, gender, religion, or other protected characteristics. This is one reason why all of our employees that interact with our dealers maintain current AFIP certification and we always recommend our dealers consider this important industry training for their staff as well.

In addition to legal compliance, it's important to maintain strong relationships with customers by providing excellent service and support. This includes staying in touch with customers to ensure they are satisfied with their loans and addressing any concerns they may have. Providing clear and transparent information about interest rates and loan terms can help build trust and confidence with customers, which can lead to repeat business and positive word-of-mouth referrals.

In conclusion, rising interest rates can present challenges for dealerships and finance managers, but by being transparent and legally compliant in their discussions with customers, they can help minimize any negative impacts and maintain and grow strong relationships over time. By staying informed about relevant laws and regulations, and providing excellent service and support, dealerships and finance managers can help ensure that customers and their friends and families are satisfied with their loans and continue to do business with them long into the future.

If you have questions about how to properly discuss interest rates with your customers in a way that protects your company, strengthens lasting relationships with your customers, and maximizes your opportunity in finance performance, please contact Vision Management Group today. We are happy to help our partners with training, processes, and strategies to help you make informed decisions that increase compliance and performance in ways that you never thought possible!

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