When HSBC announced its exit from auto financing in August, the company simultaneously reminded dealers of its powersports financing policies that one dealer said the company hasn’t enforced.
Powersports dealers were reminded via facsimile on Aug. 4 that HSBC will not give dealers an automatic credit line to finance F& products. Additionally, the company warned that accounts would be subject to a chargeback if the company determines its revolving credit applications were used to screen phone-in ;or Internet applicants.
“HSBC Revolving applications are not to be used to screen phone-in or Internet applicants. If HSBC determines the applicant was not in your dealership at the point of application, the account will be subject to chargeback,” stated the letter.
Jim Dirks, whose Killeen Powersports in Killeen, Texas, is located near Fort Hood, a U.S. Army post, said HSBC’s enforcement of its policy will make life tough for his dealership.
“A lot of our customers need a co-signer to establish their credit, as they are young soldiers in the 19- to 22-year-old group. With them being military, most are from another state,” wrote Dirks in an email.
With HSBC’s warning to dealers, Dirks said he can no longer send applications to get signatures from cosigners — most of who are the soldiers’ parents who live out of state — if he wants HSBC approval.
An even bigger concern for Dirks is HSBC’s reminder that it will not honor automatic credit-line increases on the day of approval. Now, Dirks will be required to obtain approval for a credit-line increase if he expects to add F&I products to a sale.
“Previously, if a customer got a $10,000 approval, we had access to 10 percent extra, or, in this case, $1,000 for back-end product,” he said. “The bike itself still had to fit within the original call, but we had some room for back-end and/or accessories. That room has been terminated.”
Cindy Savio, HSBC spokesperson, said the new policies reflect HSBC’s commitment to working with powersports dealers.
“HSBC remains focused on working with the powersports industry to help drive product sales by offering customers a variety of flexible payment options,” she said.
Dirks, however, is convinced that HSBC’s policy enforcement will make business tougher. “The result of these two changes is fewer approvals and smaller grosses on those approvals we do get,” he said. “Life as an F&I manager is going to get really difficult, I believe, over the next 18 to 24 months.”
