When times are tough, every penny counts, so every quote is going to be scrutinised more than when things are more buoyant. It is always important, when looking at a selection of quotes, to look at what cost is the cheapest quote being provided? With money, it is often hard to see where value can be added or where corners are likely be cut, but it can be done.
We have seen some extortionately cheap quotes being by some finance brokers and as we know the market well this is concerning for us to see. It begs the question which corners are being cut to achieve this and are the customers’ best interests really being protected? It’s therefore important to establish how the ‘cheap’ quote has been achieved, to ensure it is achievable and won’t be changed further once you agree to proceed.
The first and most obvious reason for a cheap quote, is that the broker is making no margin or in some cases paying the funder to do the business. Initially that doesn’t seem to affect you – the customer, however will the service enable you to obtain the equipment in the required timescale? Making no margin, will the broker be able to look after you for the lifetime of your agreement? Whilst arguably possible, these will be difficult to fulfil, so ultimately it will be you as the customer that will suffer further down the line.
Secondly a quote could look cheap by comparison, but not be like for like. For example, the cheap quote may have a deposit, whilst the other may not, there could even be an extra couple of payments which is bringing the monthly payment down. So, it is really important to make sure that when comparing quotes you check that the following are the same:
- Cost
- Deposit
- Term
- Agreement Type
- Fixed or variable
- Payment profile – in advance or arrears
We have also seen a lot of unachievable quotes recently, as the quote has only been provided to win the business. Unfortunately, this is a rather dishonest approach, often leaving customers stuck between a rock and a hard place when rates inevitably increase on approval. There could be a couple of reasons that this approach is used, firstly desperation in order to secure business and secondly a complete lack of understanding of the market place. Whilst the former seems to occur more often, both are equally as dangerous as to the effect on the customer.
Another big factor in cheap quotes, is far higher ‘other fees’ such as end of term and documentation fee. When there is no margin being made, overheads have got to be paid by different means. This could mean that the documentation fee is uncharacteristically high, or that the customer may receive a nasty shock when reaching the end of term. To avoid these nasty surprises, it is hugely important to read all documentation thoroughly before signing, and if end of term costs aren’t detailed, ask for them to be provided to you in an email or letter.
At Focus, we always consider all factors when providing a quote, including the type of asset, financials and supplier’s payment requirements. Our wholistic approach to quoting allows us to ensure the quote remains unchanged on approval keeping all parties happy. As a broker, our responsibility is to pair you with the right funder to achieve the best solution. On our panel we have some very cheap funders, however their decisions often require a lot of hoops to be jumped through by you and several weeks to take place, so much so that the hassle and delays caused tends to far outweigh any small cost saving.
To conclude, are cheap quotes too good to be true? The answer is quite often yes unfortunately, which is why at Focus we always quote realistically, consistently and competitively. We do however understand that passing up an opportunity that seems to be the best option on paper, will be difficult to do. So if ever you get a quote that seems to be too cheap, then send us a copy of the quote or the documentation and we will be more than happy to check it for you. If everything stacks up, we’ll let you know to bite their hand off, but if not we can explore other options!