Former dealer launches retail finance firm

June 2010 News
SALT LAKE CITY, Utah - When Billy McKee first started working in the pro shop of a MasterCraft dealership during his senior year in college, he probably didn't imagine he would eventually become a partner in the dealership. The economics and finance major was more likely to have pictured his current role as president and CEO of a technology and finance services provider. However, one led to the other. 

Soon after graduating from college, McKee took over the F&I department of MasterCraft Dealer Services, taking the $10 million dealership's F&I sales from $30,000 to $300,000 by developing a solid process that it used with each and every customer. That process was developed through the help of McKee's uncle, who owns a car dealership, and through consultation with members of the dealership's 20 Group. 

"Although I felt I was a pretty good salesperson, what I learned along the way is that you could put almost anyone into the role if you had the right process in place," says McKee. 

While he went on to become a partner in the business, opening two new dealership locations, McKee never stopped thinking about the potential for improvement in the finance sector of the marine business. And when the downturn hit, he saw an opportunity to have a real impact on marine dealers - many of which were struggling to get their customers financed - so he sold his shares in the dealership last fall, raised significant private capital and founded 

An expanding lending network 

The company, which was officially launched in December, offers two main services: software that reduces the time dealerships need to spend filling out retail financing paperwork from 40 minutes per customer to about 15 minutes and a marine lending network that stretches across the country, largely consisting of local banks and credit unions. 

"Major banks are only buying about 20 percent of the deals out there," explains McKee. "When the recession hit, a lot of people drew their money out of major banks and the stock market and put them into local banks and credit unions. At the dealership, they would buy our deals left and right, even as times got tougher and tougher. But they don't have a marketing department to go out and find new sources of loans." 

Up until this point, many dealers - if they didn't develop relationships with local banks and credit unions before the recession - have found themselves out of options, often forced to ask customers to find their own financing. But is changing that. 

McKee began calling lenders last summer in an effort to grow its lender network, and he hasn't stopped. So far, has over 110 lenders on board across the country, and it's still adding two to five lenders per week. By the end of the year, McKee expects to offer well over 200 lenders, a number which he predicts will eventually grow to 600 to 800 lenders, including options in every county of every state. 

"There are places out there willing to lend money with more lenient standards," he says. "They'll look at the individual, not just the credit score." 

While many of these small players may have been reluctant to get into a new area of lending when approached by one consumer or one dealership, they're often open to reconsidering when approached by a financial services firm that can offer a larger volume of business, McKee explains. In the end, the company has been able to secure financing for customers with credit scores from 750 to 380, he says. 

The technology to drive efficiency 

Last summer, McKee also hired software developers to transform his F&I process into a Web application dealerships could use to guide customers through retail financing themselves. The software - which can be accessed at through any computer with an Internet connection - eliminates the handwriting of contracts for understaffed dealerships, includes a menu-selling feature that ensures the dealership offers every product to every customer every time - which is key to earning revenue in F&I - and allows the dealership to retain control over the process in-house, according to McKee. 

In fact, there are two packages dealerships can choose from - one for dealers that have their own F&I department in-house and one for dealerships that do not. In the latter case, the dealer submits the loan application to, whose processors then find the right lender for the customer. The package includes compliance checks on every deal (cash and financed), the results of which are provided directly to the dealer. 

Another benefit is that customers can brand the company's products with their dealerships' names. Since its business model doesn't involve contacting consumers directly, all of its tools are designed to promote the brand of its customer - whether that is a dealer or a boat builder. 

Right now, is actively working with more than 50 dealerships across the country with the goal of about 200 dealer customers by the end of the year and, eventually, over 1,000. 

Ultimately, dealers who use products - both big and small - can streamline their process, save money and far increase their approvals, says McKee. 

Boat builder customers include MasterCraft, Correct Craft, Skier's Choice and Centurion, among others, says McKee. In some cases, the company attends their dealer meetings and markets its services to their dealer network. In others, there is a formal partnership in which offers a branded service to their dealers, ie. Centurion Financial Services. The partnerships enable the boat builders to accept credit applications through their Web sites and route it to the dealership that matches the customer's zip code. 

Doing the math 

After consulting with the 20 dealerships that made up its beta group, settled on a business model in which it charges a flat fee for its services, rather than splitting the profits of each deal with customers. 

The company charges $299 on each finance deal that is approved and $99 on a cash deal. Most dealerships pass along these fees to their customers in the form of documentation and processing fees. In addition, expects to generate a minimum monthly commission per dealer of $399, which most dealers have no problem generating. "Here and there, a dealer may end up paying it in the winter," McKee comments. 

While he admits that could probably make more money per deal if it split the profits with their customers, McKee says the company is expecting the volume of business it will be able to generate with its business model to make up for that. In fact, while McKee's background is in marine and this is the first market the company is targeting, it plans to expand into the powersports and RV markets later this year. 

While today the Salt Lake City, Utah-based firm employs five loan processors, three bank relations professionals, five salespeople, three employees in operations and one in accounting, those numbers will likely grow as the company expands. And expansion is expected. McKee says it expects to realize a similar level of penetration in the RV market this year as in marine. And while it is "tip toeing" into the powersports sector, McKee envisions eventually signing up at least 1,000 dealers from that market alone. 

Its' biggest differentiator across all three markets? "In the end, we're focused on what the dealer needs," concludes McKee. "Very few businesses that serve our industry do that. The dealer always feels like the guy left out. We can change on the fly and adjust to dealers' needs. We do it the way the dealer wants it to be done."
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