Offering finance to my customers.

tonymon123

Hi all, I have a garage, ltd company, multiple staff etc, have been in business for over 5 years. we fix and sell cars.

If i wanted to offer finance to my customers, without doing it through another finance provider, can anyone advise on an approach to take?

I know that a company can register as a credit intermediary in Ireland once it has tax clearance, and ltd company.

If I was to register as a credit intermediary, and let's say Mary from down the road wanted to finance a car from me, she provides us with her bank statements, payslips, etc how would I access Mary's credit history from the registrar once she has given consent to do so?

If anyone has an info or thoughts, let me know. Thanks

dotsman

Em, a credit intermediary is someone who does offer finance through a finance provider.

What you are talking about is wanting to become a Finance Provider. No offence, but good luck! The knowledge of finance, capital requirements, regulatory requirements and IT software required would make it impossible for a small company such as yours.

All dealerships etc offering finance are credit intermediaries.

Even to become a credit intermediary requires sufficient knowledge of lending practices/regulations which you need to read up on before you go down this road. After that, you need to partner with one or more finance providers.

walterking

Steer well clear of anything like that.

There are finance companies that will give Mary a very good rate if you pay towards it.

Humm is an example - they tend to want about 12%.

They can take 5% commission from you and offer Mary 6.99% or 9.99% and 2% etc

Mick Tator

This reminds me of the thread a while back when a poster wanted to start his own insurance company. (and no, his name wasn't Quinn!)

bucketybuck

As somebody in the motor trade my entire life I think it is a terrible idea that you would definitely come to regret.

Put it like this, I have worked for main dealers turning over €90-100 million a year. They didn't offer any finance themselves, they used 3rd parties. Why do you think that is?

Buddy Bubs

Theres only 1 company i know of in Ireland doing this, pay-as-you-go-auto.

They don't offer finance but let you pay for the car in stages over 2 to 3 years I think after giving an initial deposit of about 25%.

They seem to be succesful but of course they have to charge a bit extra for the car to compensate for the time value of money and the fact they're quite likely to be funding this from borrowings too. Customer base is probably those with poor credit rating although that doesn't mean they're not going to pay, just have some legacy issues.

So it could potentially work but you'd need a very solid foundation of credit yourself along with a massive war chest, an employee or a partner company with a financial/banking background.

I wouldn't recommend it all said though.

Spark Plug

You’ll need an APA (Accredited Product Advisor) to sell the product to consumer.

joeguevara

Regulation under Consumer Credit Act expanded the requirement to be regulated by the Central Bank of Ireland. It brought in Buy Now Pay Later schemes which were previously exempted.

If you offered credit without charging interest then good to go. Other than that, it’s really strict and costs and compliance usually outweigh the benefit. Perhaps teaming up with the credit union where they would provide a loan to be used in your business but completely separate. I have seen this work well with green loans used to retrofit insulation or wedding loans teamed up with venue.