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What are the benefits of Dealer Equity Programs?

Posted by Steve Memolo on Aug 9, 2021 12:00:00 PM
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Auto dealer equity programs are a burgeoning business idea that's gaining momentum among automobile finance managers, dealer principals, and general managers. Equity Programs are customized financial products designed to enable auto dealers to cater for the costs of product and service cancellations and claims. The business, which aims to protect your auto dealership's finances requires the creation of a C-corporation insurance company. You must maintain good money flow into your account so that you can effortlessly cater for any unexpected losses and costs that may hinder your company's flow of income.What are the different types of Dealer Equity Programs?

Auto dealers nursing the idea of starting dealer equity programs have several choices to consider. Deciding on which program is right for you will depend on your goals and what you’re trying to accomplish:

  • First is the dealer-owned warranty company, which is a safer and more efficient alternative to the NCFC structure. This is a favorite choice among larger dealership companies. The effectiveness and usefulness of this reinsurance structure, however, depends on the state you're operating from.
  • Second is a non-controlled foreign corporation (NCFC) structure. The problem with this dealer-owned reinsurance structure is the strict eligibility requirements.
  • The third and last choice is the affiliated reinsurance company. It's highly preferred by dealerships of all sizes because it offers friendly tax benefits.

Why should a dealer consider these Dealer Equity Programs? What are the benefits?

Automobile companies looking to venture into dealer equity programs have a lot to benefit and little to lose. These business structures are profitable ventures that promise to keep your risks on check and profits higher.

  1. Client Satisfaction — with certain dealer equity programs, you are in total control of your insurance and warranty claims. You have control of your customers' experiences, and so you can keep them happy and increase your company's growth.
  2. Maximizes profit and cash flow — with dealer equity programs, you'll always earn the premium reserves that third-party and insurance providers make when unused claims are paid out. These programs are profitable sources of income and excellent profit creation sources.
  3. Allows you to customize terms and policies to your liking — these programs enable auto dealers to personalize their terms and coverage to maximize profits.

For further details on dealer equity programs, feel free to contact us.  

Topics: Dealer Equity Plan, Dealer Equity programs, dealer reinsurance

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