Drive Results with Auto Dealership Business Financing

Auto Dealership Industry Trends

How do industry trends affect auto dealership business financing? While some retail-based industries have faced tough numbers with the rise of e-commerce, auto dealerships are earning more than ever before. IBIS World reported that the total revenue on the sales of new cars is $956 billion in 2019. This represents a 2.3% increase in sales over the past five years, since 2014. At the same time, the revenue of used car sales has also increased by 4.6% from 2014 to 2018, according to research from IBIS World. Sales from used car deals added up to a total of $114 billion in 2018. Dealerships of both new and used vehicles see this profit margin as a sign to invest in car dealership loans. According to the National Automobile Dealers Association, dealership service and parts sales totaled more than $116 billion in 2018. This sum is the result of over 310 million repair orders. Many auto dealerships are seeing this lucrative outcome as an opportunity to expand their businesses by offering for their customers.

Sources for Auto Dealership Business Financing

When you’d like to grow your business, you might look toward many sources to get access to cash. There are several major types of lenders business owners typically look to when they’re in need of an auto dealership loan: floorplan financing, banks, the Small Business Administration (SBA), and alternative lenders.

Banks

Banks are a popular choice for big businesses, as they provide large loan sizes to support auto dealership business financing. In addition, banks typically provide consumers with expertise on how they might use their capital. However, these lenders have high rejection rates, with little to no forgiveness for poor credit. They also have long waiting periods, leaving you in the dark for weeks about whether or not you’ll be approved.

The SBA

The SBA, a government agency that provides programs to offer bank loans at better rates, is a more viable option for small business owners. However, working with the SBA isn’t perfect since they still work through a traditional banking system. As such, they have strict rules on how you can use your funding and have rejection rates that are almost as high as those of large banks.

Alternative Lenders

Today many small businesses look to alternative lenders to provide them with funding to grow. These types of lenders typically provide a fast and simple application process compared to traditional banks and SBA programs. The turnaround time on funding can take place within a matter of days. Plus, alternative lenders can usually work with applicants that have poor credit scores. They can also work with young businesses that have only been operating for less than two years.