The “Tight” Credit Market’s Impact on Buying a Wag’n Tails Mobile Grooming Vehicle

By
John Stockman

Every single day, every time we watch TV or listen to the radio, we hear gloom and doom this and gloom and doom that! We hear how tight the credit market is. The credit market must be so tight it squeaks when it moves. It must be impossible to get a loan, especially for a grooming van.

Well, Wag’n Tails begs to differ with those opinions!

In this brief article, my intent is to enlighten you on how the “tight” credit market applies to Wag’n Tails. I’ll review our relationship with lenders, why local bank financing can be difficult to get and how used van financing is unique. Finally, I’ll provide some basic truths about mobile grooming van financing and review the Wag’n Tails sales process.

Reality

The fact of the matter is our lenders are as aggressive today as they ever have been! In other words, we are getting loans approved through our major lenders today as we have in the past. We are simply not seeing any tightening up on credit with our lenders in the least. They haven’t upped the standards on who qualifies for a loan nor have they added any other barriers to the process of our clients being accepted for loans.

As long as our clients have a good credit score, a reasonable debt to income ratio and timely installment payment history (like on a house or car) they get financed on a new or used Wag’n Tails mobile grooming vehicle.

Understanding the Business

All of our main finance sources understand mobile grooming. That may not sound like a big deal unless you’ve tried to go out on your own to get a grooming van financed. If you have tried it, you know what a chore it is to get a banker to grasp the basic concept of mobile pet grooming, let alone grant you a loan for one. It’s not impossible to secure your own financing but it can be frustrating to say the least.

Local banks might be willing to grant you a loan if you’re an established business with a great credit history but if you’re a start-up business it is more difficult. They just don’t understand the mobile grooming business model, and in many cases, they don’t want to learn. They tend to see the whole proposition as way too risky--especially in “today’s” market.

As you might guess, a large portion of Wag’n Tails clients are start-up businesses. Some are groomers fresh out of school, some are leaving a shop. Some others are established and are adding vans to their mobile fleet or grooming shop operations. The key is they all want to be their own boss and enjoy the freedom and excellent income that mobile grooming affords.

Why Aren’t They Tightening Up?

So why do our lenders still aggressively finance new and used Wag’n Tails for our clients? What makes us so special?

First off, our lenders get it. Wag’n Tails has taken the time to educate our finance sources about mobile grooming so you don’t have to. Our major lenders understand mobile grooming because we have expended considerable time, effort and expense to teach them.

Also, Wag’n Tails has dedicated credit analysts at our lending institutions that review the financing proposals we submit to them. These analysts have not only visited our facilities, they have a clear understanding of the mobile grooming business model.

Our track record is another reason. We have been doing business with them for over 12 years. They know that our clients pay their loans on time because we work hard with them to ensure their success. They see us pass on our knowledge, skill and expertise in this business to all of our clients from the very beginning. They have seen our outstanding customer service and highest possible build quality that results in minimal downtime and thus, less income interruption in our clients businesses. These factors greatly increase our lenders comfort level.

Finally, our financing packages submitted to them are uniform and formatted to suit each lender’s review requirements. Wag’n Tails, working closely with the client, assembles a custom tailored finance package that allows the lender to quickly and easily evaluate our client’s creditworthiness. Also, this finance package is owned by the client and can be used when trying to secure a loan from sources other than ours, such as their own local bank or credit union. Wag’n Tails is and always will be pro-groomer because our success depends on your success and the success of our more than 1200 clients worldwide.

All of these factors help our lenders look for ways to approve a loan rather than pinpointing reasons why to reject it.

Used Van Financing

Now let’s look at used vehicle financing. There is a common misconception that used vans are easier to finance than new because they cost less. This is completely understandable. In reality, they can be more difficult to finance and usually require even stronger creditworthiness for several reasons. These reasons all stem from banks having an extremely limited understanding of mobile grooming as a concept and the market value for used grooming vans.

First, there is no “blue book” market value for them to reference. They look at the value of a used cargo van which is always much less than the market value of a used grooming van. They see a used cargo van book value that is worth only 20% (or less) of the loan amount you’re requesting. Strike one.

Next, you explain that it is a specialty commercial vehicle and they realize they have no way to assign a value to it. Strike two.

Finally, because it is used, they expect wear and tear issues, in some cases no warranty and they assume less dependability. That gives them the perception of a higher likelihood of interruptions in the income stream the van produces. This is perceived as even more risk. Strike three.

Our experience has demonstrated that used van financing usually carries larger down payments, higher interest rates and shorter repayment terms because of the higher perceived risk in the lender’s eyes. That usually boils down to a monthly payment amount on a used van that isn’t much less than a new one.

More facts to consider:

• Keep track of your credit score--monitor it at least annually. Go to annualcreditreport.com or call 877-322-8228 to make this happen.

• A loan for a new or used grooming van is not a consumer loan like when you buy a personal car. It’s a commercial loan based on the prime lending rate plus X percent.

• A grooming van is not a Taurus. It’s a specialized commercial vehicle with no “blue book” value so the loan is inherently riskier to a bank when compared to that Taurus.

• Consideration should be given to a home equity loan because you may get a good interest rate and you can usually do whatever you want with the money.

• When talking to local banks and credit unions, be sure they understand that it is a specialized commercial vehicle up front. Be sure to ask if they make commercial loans so you don’t surprise them, or get a surprise yourself, later.

• If you are an established business, always deposit all your revenue. If you pocket the cash, your revenue history will be understated and that’s what the banks want to see when reviewing you for a loan.

• Selecting the lender is critically important because you’ll be married to them for the term of your loan. Choose wisely to avoid headaches down the road (pun intended-sorry).

• Used vans older than 6 model years are nearly impossible to finance so you can expect to pay cash.

The Wag’n Tails Way

First of all, it’s a painless process that is simple, fast and focused on your comfort every step of the way. Whether you’re financing a new or used Wag’n Tails from us, we communicate with you throughout so you always know where you stand in the purchase process.

Once you provide us with your application for a loan on a new or used van or trailer, the whole approval process takes only a couple of days. Even the loan application is simple. We have a link on our website to a secure on line application that takes just a couple of minutes to fill out and it is transmitted directly to us.

Our vans come from our dealership affiliate and rest assured, they too understand our business and will make your purchase smooth and effortless. Wag’n Tails does not mark up the van itself and all factory rebates are passed through to you to directly reduce the cost of the van chassis.

All of our prices are clearly and accurately posted on our website. We don’t give you an estimate of the price; we show the exact price of each of our products. You can even add or delete options, total the price of your van and options, get a monthly payment and even calculate your overhead and profit.

All Wag’n Tails grooming vans and trailers are financed as a complete package. In other words, when you buy form us, financing is accomplished in one easy step. You don’t have to buy the van separately, make payments on it and insure it while waiting months for it to be converted. We have a ready-to-convert van and trailer inventory at our facility at all times. When you decide to buy, you’re given the exact date your van will be completed. Our turnaround time from order to completion is only 4-6 weeks.

All used Wag’n Tails vans we sell have come from our clients trading in on a new vehicle. We sell them on the usedgroomingvans.com website when we have them available. Each van completes a 100 point chassis inspection and a 91 point conversion inspection. All substandard items are repaired and replaced where necessary.

Summary

I hope you now have a clearer picture of the “business as usual” credit market our clients experience every day here at Wag’n Tails. Also, you should have a good understanding of our relationship with our lenders and how we have educated them on our business model. You should be able to see why most local banks shy away from the idea of mobile grooming lending. Finally, I covered why used financing can be more difficult to get than new, some helpful hints when you start thinking of purchasing a new or used grooming van and a review of how we sell our vans.

If you have any questions or comments, feel free to contact me at 800-513-0304 or email me at john@wagntails.com anytime. All of us here at Wag’n Tails are always happy to help in any way we can.