how can i safely give finance in business?

THOMAS TYRRELL

hi all,
firstly i know there is no was to be 100% safe when giving out finance, secondly i know ill have to talk to a solicitor regarding contracts and the implications of offering finance/debt collection...just wanted some insight before i look too much into this.

I own a car repairs garage and have been operating on my own for two years now. business is going well enough but i really would like to have enough to take on another mechanic/apprentice so i was thinking about giving short term credit to some customers.

the reason for this is with the state of the economy the car service industry has gone very slow as people tend to put the service on the long finger. on the other hand, breakdown repairs/nct repairs, is more in demand, unfortunately were not always prepared for these costly repairs, so i was thinking if somebodys clutch went for example and it was going to cost 400-500 euro to repair, and i was offering a service where i could charge 20% upfront and finance the rest over 4-8 weeks it would be quite desirable and hopefully boost sales.

my main concern is how can i stop people abusing the service. obviosly id need to have contract signed and proof of id, ownership of car etc but what forms of security should i be looking for?? using car as collateral, holding on to log book?? I dont want to insult people either so please share your thoughts/experience.
cheers
tom

dazed+confused

I think that's a great idea and I'm 100% behind you when you say you need to be cautious. However I think you're right to also be careful about not offending people. I for one would not hand over my VLC (logbook) and risk losing my car over the price of a clutch.

THOMAS TYRRELL

dazed+confused wrote: »

I think that's a great idea and I'm 100% behind you when you say you need to be cautious. However I think you're right to also be careful about not offending people. I for one would not hand over my VLC (logbook) and risk losing my car over the price of a clutch.

the only thing is if you intended to pay you wouldnt really be taking much of a risk, and to be honest that would be a last resort, id much rather work with people and set up a realistic payment scheme,
but i see where your coming from... i need to find a happy medium where people would be willing to give me some form of security, which would ensure they didnt mess me about, and that i wouldnt be sweating over payments.
the last thing i want is to be getting legal,
any more suggestions?

Peterdalkey

You can give credit effectively by taking credit cards and you have none of the risk. You would be mad to take the credit risk yourself and face the prospect of trying to get paid afterwards or having to sue the debtor. Now is not the time to be extending credit to people who cannot afford your services in the first place.

THOMAS TYRRELL

Peterdalkey wrote: »

You can give credit effectively by taking credit cards and you have none of the risk. You would be mad to take the credit risk yourself and face the prospect of trying to get paid afterwards or having to sue the debtor. Now is not the time to be extending credit to people who cannot afford your services in the first place.

the only problem there is you are limited to those who have credit cards, arent maxed out and are prepared to use them(i personally try not to spend on it unless absolutely nessiccary) where if you were offering people a service where they pay eg.€50 per week by d.d./s.o it may be more appealing??

markymark21

If its at all possible for you to carry out a credit check on an individual before you give them credit it could be a great idea!

Otherwise you'd have to leave it to your judgement as to whether or not certain people are credit worthy!

For sure though, you will get stung at some stage by someone. You just gotta work out if this policy would generate enough extra revenue that you could absorb any non- payments

Peterdalkey

THOMAS TYRRELL wrote: »

the only problem there is you are limited to those who have credit cards, arent maxed out and are prepared to use them(i personally try not to spend on it unless absolutely nessiccary) where if you were offering people a service where they pay eg.€50 per week by d.d./s.o it may be more appealing??

You rather make my point! You would be mad to give credit to people who have no normal source of credit available to them, they are the highest default risk category. I very much doubt you could afford the downside if they did not pay you and you would still have to pay out for parts and your overheads.

I think you would be taking a very unwise risk and would seriously expose yourself to significant default. There are many who would seek to exploit your offer and not pay.

Sorry to be so pessimistic.

Peter

aidan.connolly

Hi,

Having purchased a few items on credit from a large retailer ( between 300.00 and 400.00 EURO ).

They use a finance house so they dont risk a bad debt.

I sign a direct debit and they take the money over 12 months interest free.

I don't know anything about the fees etc, but I am sure some of the other boardies will be able to enlighten you.

If someone has to spend this amount, it might be a good selling point for you to offer this service.

Good luck with it !

THOMAS TYRRELL

im under no illusion that this could be foolproof and of coarse ill get somebody looking to chance their arm, i suppose credit checks would be a good place to start.
I wonder if theres any credit companys out there who would supply the credit taking the risk away from me??

Gloomtastic!

This one screams NO! to me at every angle. Once word gets out you do fixes on the never never, you'll have every chancer in Ireland banging on your door.

However, holding on to the VRC, two recent proof of addresses and charging say a 20% premium might make it worthwhile in the medium term.

jimmycrackcorm

Gloomtastic! wrote: »

However, holding on to the VRC, two recent proof of addresses and charging say a 20% premium might make it worthwhile in the medium term.

You can apply for a replacement VRC for €12 iirc.