I think one of my tool truck drivers has had it with non payers

[Shoreline_]

He's started to air out his grievances on fb and saying things like "and to these dead beats I need payment" then tags their fb or what not. I've never seen this from him he's on his 6 or 7th year as a dealer.

The whole truck credit is really a bad idea for this day and age for both the seller and the buyer. If I had a route I would only accept cash or some other bank payment and the bank can deal with them not paying back their credit. Like if you can't make weekly payments on your own cc or don't have a cc that can cover what you're buying from me do I really wanna lend you 300 bucks for a ratchet. I've never seen anyone with ****** bank credit and perfect truck credit. Old habits die hard.

 

[Junkman]

I may be wrong, but the truck credit is carried by the corporation that supplies the truck with tools, such as Snap-On, Mac, Matco, etc. Now, some truck salespeople might carry the credit on their own, hoping that the customer makes their payments on time. This is why I have been hesitant to buy a box I see at a swap meet: it might have a loan on it. Once again, I believe that if the truck dealer takes the credit card, he must pay the discount fee, and the credit card terminal is part of the truck sales agreement, so he gets his money from Snap On, etc., which goes toward the purchases he stocks the truck with. I know that the local Snap-On dealer will absorb the sales tax on some small cash purchases. Most techs won't purchase an item if they have to pay for it all at once, and they also don't want to put it on their personal credit card, where their wives might see it. Most people with bad credit get evicted because they don't pay the rent, and they can't drive a nice car because the one they bought on credit was repossessed. They also have a bad habit of borrowing money from friends and family and never paying it back.

 

[Shoreline_]

Truck credit is when your driver is your lender. Snapon, Mac, Matco credit is when you deal with the main affiliation corporation as a bank.

 

[toolenthusiast]

“Truck credit” means exactly that: truck credit. It’s smaller, interest-free loans from the franchisee. It keeps the purchases coming and it keeps everyone coming back on the truck every week.

 

[Steve_P]

This has been discussed a lot here in the past.

As said above, truck credit is interest free, not on a CC, typically paid weekly, and managed by the dealer- I'd bet that at least 10% of their sales $ are written off as non-payment losses when guys change jobs, disappear, leave the state.... A dealer isn't going to chase after someone a thousand, or even hundreds, of miles away for a few hundred dollars. The reality is that a lot of young people can't qualify for a CC and this is how the trucks get them- weekly payments. And this is also part of the reason you pay a premium for a tool truck purchase.

If you make a large purchase, like a tool box, and don't pay cash or CC, then it is financed by Snap On and you pay big interest on it.

 

[d.mcfarland]

“Truck credit” means exactly that: truck credit. It’s smaller, interest-free loans from the franchisee. It keeps the purchases coming and it keeps everyone coming back on the truck every week.

Or maybe it's to keep the truck coming back to the shop each week.

 

[Hakeem]

I’m sure it’s a headache for the drivers but truck credit is one of the biggest reasons to shop on the truck for lots of guys. There are other sources for professional tools with lifetime warranty, but only the trucks will extend big lines of interest free credit to nearly anyone.

 

[mikegt4]

I view "truck credit" as a "buy here/pay here" car lot on wheels, all that is missing is a tracking device on every tool although there might be one hidden inside tool boxes.

 

[L.Cheapo]

This has been discussed a lot here in the past.

As said above, truck credit is interest free, not on a CC, typically paid weekly, and managed by the dealer- I'd bet that at least 10% of their sales $ are written off as non-payment losses when guys change jobs, disappear, leave the state.... A dealer isn't going to chase after someone a thousand, or even hundreds, of miles away for a few hundred dollars. The reality is that a lot of young people can't qualify for a CC and this is how the trucks get them- weekly payments. And this is also part of the reason you pay a premium for a tool truck purchase.

If you make a large purchase, like a tool box, and don't pay cash or CC, then it is financed by Snap On and you pay big interest on it.

I don't think any franchisee could survive with a 10% skip rate.

My dealer has had one guy he's been looking for since before covid. Other than that one guy, he says he needs to chase down one or two guys a year. Maybe he's different since a large part of his route is not auto repair.

Where they will really chase someone is if they skip out on Snap On Credit if they sold you the box/scan tool/etc. It was many years ago I asked, but I seem to recall the selling dealer gets charged back some percentage from corporate if someone skips out on them--thats what motivated them to do repos. Maybe its different now.

With good credit, Snap On credit is often interest free for 90-180 days. Unfortunately, using their credit is usually the only way to get the large rebates on toolboxes/scan tools. But if you pay it off in the grace period--no interest.

 

[CoThG]

I view "truck credit" as a "buy here/pay here" car lot on wheels, all that is missing is a tracking device on every tool although there might be one hidden inside tool boxes.

The Big 3 (Snap-On, Matco, MAC) should put remote locking and tracking devices on their toolboxes so that they can lock them if the mechanic falls behind on his weekly payment... Like some BHPH car lots do with remote disabling, if you don't make your payment... LOL

 

[545_days]

Many tool truck drivers fail because they mistakenly believe they are only in the tool business when they are also in the money lending business.

Being in the money lending business doesn't make anyone a bad guy. Tool truck owners must properly manage the money lending part of their business or they are doomed.

 

[finn]

I don't think any franchisee could survive with a 10% skip rate.

My dealer has had one guy he's been looking for since before covid. Other than that one guy, he says he needs to chase down one or two guys a year. Maybe he's different since a large part of his route is not auto repair.

Where they will really chase someone is if they skip out on Snap On Credit if they sold you the box/scan tool/etc. It was many years ago I asked, but I seem to recall the selling dealer gets charged back some percentage from corporate if someone skips out on them--thats what motivated them to do repos. Maybe its different now.

With good credit, Snap On credit is often interest free for 90-180 days. Unfortunately, using their credit is usually the only way to get the large rebates on toolboxes/scan tools. But if you pay it off in the grace period--no interest.

May seem like interest free, but if the markup is 50% or more, who’s fooling who?

The non payers are just being subsidized by the regulator customers who pay on time.

That’s not much different than any other company that offers financing, other than most companies would use a credit history / credit score to screen out bad actors. If the tool truck driver isn’t screening buyers, he’s either making up the losses by overcharging other customers, or he’s going out of business.

 

[1Bad55Chevy]

I own a BHPH car lot so this is up my alley!

How this works is you need a lot of accounts to offset the amount of cash you are putting in the streets. 100 accounts paying $125 a week sounds awesome right? That's $12,500 a week, if everyone pays. In the car business we typically run a 30% repo rate and about 50% of your accounts will be behind by atleast a week. I would assume the tool truck accounts would have similar numbers. So out of that $12,500 a week you hope to collect realistically you will avg around $7,500. Still sounds awesome right? Now you got to deduct what your putting back on the streets every week.... its a tough business!

Now the margins have to be big when you do this because you dont want people making payoff because that cripples you ability to sell. In the car business on vehicles I purchase for $7k and under markup is (cost x 2 + 1,000+ 24% int). I dont know the exact margins for tools but its going to be BIG in order to offset the risk.

It gets difficult for a tool dealer to repo tools because they dont want to piss off the whole shop and lose customers. I have helped my buddy (who also does my repos) do a few tool box repos and you have to go in there willing to fight the entire shop. As a car dealer I dont care who I piss off when I repo the car because they are not my customers.

 

[Hakeem]

I dont know the exact margins for tools but its going to be BIG in order to offset the risk.

The franchise disclosure document I saw from Snapon said the average margin on tools was ~33% or so. A healthy margin for a typical business, but smaller than i would have expected.

 

[CHI_Tool&Die]

My first Matco dude went under due to his inability to manage his truck credit accounts and he was shady and an idiot. I’ve only seen a couple repos on the Snappy and new Matco truck and they are usually tools or scanners. Most guys here will find a way to make a toolbox payment but won’t bat an eye at losing out on an air hammer or wrench set.

I’ve never used truck credit but I totally see why it’s a good thing if managed properly. It helps guys afford the tools, it keeps foot traffic going for the driver, and it keeps the truck coming to the shop which makes warranty claims easy. Most of the drivers can spot a bad client and I’ve seen my Snap-on guy kick people off the truck or refuse to serve them. The new Matco guy is even more relentless with his accounts. Only the MAC guys seem to really not care and I’m assuming that’s cause they have had the same patrons forever.

 

[zendriver]

Isn’t going into debt to buy expensive tools, literally their entire tool truck business model?

Certainly, they’ve always been deadbeats, but if it becomes more rampant, it would surely be a sign of the times.

 

[JeepYJ]

May seem like interest free, but if the markup is 50% or more, who’s fooling who?

Seems like the guys who think they’re getting tools that are vastly superior to any other tools in the world.

The franchise disclosure document I saw from Snapon said the average margin on tools was ~33% or so. A healthy margin for a typical business, but smaller than i would have expected.

That doesn’t seem like much considering the route guy has to have a mobile sales floor and drive countless miles and hours a week.
I’d imagine the parent company takes an even larger margin than the driver.

 

[rust in the eye]

So deadbeats ****, everyone knows that.
Part and parcel of the tool truck business model is extending credit for(IMHO too) expensive tools his customers wouldn't always buy if having to fork over cold hard cash all at once. Pretty sure the criteria to extend credit is the ability to fog a mirror, so.......
I'm also pretty sure those healthy margins on truck brand tools have a certain percentage of deadbeats baked into the pricing.

 

[rust in the eye]

I own a BHPH car lot so this is up my alley!

How this works is you need a lot of accounts to offset the amount of cash you are putting in the streets. 100 accounts paying $125 a week sounds awesome right? That's $12,500 a week, if everyone pays. In the car business we typically run a 30% repo rate and about 50% of your accounts will be behind by atleast a week. I would assume the tool truck accounts would have similar numbers. So out of that $12,500 a week you hope to collect realistically you will avg around $7,500. Still sounds awesome right? Now you got to deduct what your putting back on the streets every week.... its a tough business!

Now the margins have to be big when you do this because you dont want people making payoff because that cripples you ability to sell. In the car business on vehicles I purchase for $7k and under markup is (cost x 2 + 1,000+ 24% int). I dont know the exact margins for tools but its going to be BIG in order to offset the risk.

It gets difficult for a tool dealer to repo tools because they dont want to piss off the whole shop and lose customers. I have helped my buddy (who also does my repos) do a few tool box repos and you have to go in there willing to fight the entire shop. As a car dealer I dont care who I piss off when I repo the car because they are not my customers.

Wouldn't it be easier to focus on a better clientele rather than dealing with bustouts day in and day out?

 

[Shoreline_]

My Matco driver says he needs 50 to 60 grand owed to him so that the weekly payments add up enough for income. I know when he's starting to slow down he hits me up if I need something.

 

[mike93lx]

My Matco driver says he needs 50 to 60 grand owed to him so that the weekly payments add up enough for income. I know when he's starting to slow down he hits me up if I need something.

The debt trap in reverse. This is wild

 

[Shoreline_]

The debt trap in reverse.

Yea without interest, I never thought of it that way. At least a bank makes money off the interest.

 

[mike93lx]

Yea without interest, I never thought of it that way. At least a bank makes money off the interest.

There's lots of interest involved. It's hidden in the price

 

[Shoreline_]

There's lots of interest involved. It's hidden in the price

How? I pay the catalog price with the truck account. Interest isn't the same as a markup. If a tool cost 100, I pay 10 payments at 10 dollars. Zero interest.

 

[mike93lx]

How? I pay the catalog price with the truck account. Interest isn't the same as a markup. If a tool cost 100, I pay 10 payments at 10 dollars. Zero interest.

The cost of carrying that debt eats into profit margins. It's not free.

The price is adjusted to include that cost.

 

[Shoreline_]

The cost of carrying that debt eats into profit margins. It's not free.

The price is adjusted to include that cost.

Eh it's a stretch. Holding the debt doesn't eat into profit margins you make the same profit once the debt is paid off. If all accounts settled on the same day or across six months from that single day it's the same profit after six months.

 

[mike93lx]

Eh it's a stretch. Holding the debt doesn't eat into profit margins you make the same profit once the debt is paid off. If all accounts settled on the same day or across six months from that single day it's the same profit after six months.

This isn't a stretch at all, money isn't free. Instead of floating that to customers, it could make money elsewhere, or the franchisee may even be paying interest to float that

 

[CHI_Tool&Die]

My Matco driver says he needs 50 to 60 grand owed to him so that the weekly payments add up enough for income. I know when he's starting to slow down he hits me up if I need something.

My Matco guy still owes on the tools and truck because he’s only got a few years in. He’s paying $4k/monthly just for that. It’s partly why he’s super careful with how he handles customers.

 

[JeepYJ]

How? I pay the catalog price with the truck account. Interest isn't the same as a markup. If a tool cost 100, I pay 10 payments at 10 dollars. Zero interest.

If you’re paying full price at time of delivery you’re getting the short end of the stick if you could stretch the cost out for ten months.

 

[finn]

Eh it's a stretch. Holding the debt doesn't eat into profit margins you make the same profit once the debt is paid off. If all accounts settled on the same day or across six months from that single day it's the same profit after six months.

That’s not how finance works.

If I have $10k in my account, it’s not the same as if you owe me $10k.

I have to discount what you owe me if I want to sell the debt to someone else so I have money to spend on something.

 

[mike93lx]

If you’re paying full price at time of delivery you’re getting the short end of the stick if you could stretch the cost out for ten months.

Never pass up an arbitrage opportunity! A chance to make $10 on $200 in the market! Or $3 in a savings account. Do that enough times and you can buy a Happy Meal

 

[neophyte]

The Big 3 (Snap-On, Matco, MAC) should put remote locking and tracking devices on their toolboxes so that they can lock them if the mechanic falls behind on his weekly payment... Like some BHPH car lots do with remote disabling, if you don't make your payment... LOL

Do you really think the average person trained to repair vehicles would not be able to find, and disable a tracking or wheel locking device built into a toolbox, or to move a box even if the wheels got locked?

 

[Hakeem]

Seems like the guys who think they’re getting tools that are vastly superior to any other tools in the world.

That doesn’t seem like much considering the route guy has to have a mobile sales floor and drive countless miles and hours a week.
I’d imagine the parent company takes an even larger margin than the driver.

I agree. Seems like a tough way to make a living.

 

[YesIHaveAHammer]

I'm not at all surprised small scale ad-hoc lending is a very tough business to be in.

With the franchisee model, seems Snap-on etc. offloaded the risks (finanical & repo violence) to other people.

 

[jd_1138]

I may be wrong, but the truck credit is carried by the corporation that supplies the truck with tools, such as Snap-On, Mac, Matco, etc. Now, some truck salespeople might carry the credit on their own, hoping that the customer makes their payments on time. This is why I have been hesitant to buy a box I see at a swap meet: it might have a loan on it. Once again, I believe that if the truck dealer takes the credit card, he must pay the discount fee, and the credit card terminal is part of the truck sales agreement, so he gets his money from Snap On, etc., which goes toward the purchases he stocks the truck with. I know that the local Snap-On dealer will absorb the sales tax on some small cash purchases. Most techs won't purchase an item if they have to pay for it all at once, and they also don't want to put it on their personal credit card, where their wives might see it. Most people with bad credit get evicted because they don't pay the rent, and they can't drive a nice car because the one they bought on credit was repossessed. They also have a bad habit of borrowing money from friends and family and never paying it back.

Yep, the idiocy gets compounded on top of prior idiocy and bad choices. A friend of mine has a 4-unit rental apartment complex. He had to start eviction proceedings on a young couple recently. They moved in 3 months ago and only paid one month's rent. He noticed they only had one car -- a 2012 or so Malibu with stickers indicating it was from a local buy here/pay here car lot. When they didn't pay the 2nd month's rent, they blamed it on the car because it quit running. But then a newer Jeep Cherokee (2010 or so) showed up with dealer plates and from another buy here/pay here place.

He theorizes they must have a huge car payment because they stopped paying the $700 apartment rent. Good luck with that old Jeep that will probably nuke itself soon under their lack of maintenance. You can't fix stupid.

 

[jd_1138]

I'm not at all surprised small scale ad-hoc lending is a very tough business to be in.

With the franchisee model, seems Snap-on etc. offloaded the risks (finanical & repo violence) to other people.

Yep 100%. SO, Matco, Cornwall, Mac, etc. realize they'd have to have huge departments to deal with the debtors. So much easier to push it off onto the franchisee. Also, I guess at a practical level, they assume the tool truck owners will get to know their customers and learn what customers can be trusted with truck credit.

My mechanic dad who was a mechanic from the 1960s til 2015 was perplexed by the young techs who'd pop in new to a dealership or shop with brand new Mac or SO boxes filled with tool truck brands. About half decided they hated wrenching or got canned within a few months. They'd then disburse the tools to their fellow mechanics for 1/5 their value. Smarter ones would load their boxes up in their dad's truck and keep them for their own repairs for for friends/relatives.

If I were a new tech these days and had no inherited tools, I'd start with Quinn and Doyle tools from HF. Then gradually maybe add truck brands into the mix if they make my job easier/faster.

 

[zendriver]

Yep, the idiocy gets compounded on top of prior idiocy and bad choices. A friend of mine has a 4-unit rental apartment complex. He had to start eviction proceedings on a young couple recently. They moved in 3 months ago and only paid one month's rent. He noticed they only had one car -- a 2012 or so Malibu with stickers indicating it was from a local buy here/pay here car lot. When they didn't pay the 2nd month's rent, they blamed it on the car because it quit running. But then a newer Jeep Cherokee (2010 or so) showed up with dealer plates and from another buy here/pay here place.

He theorizes they must have a huge car payment because they stopped paying the $700 apartment rent. Good luck with that old Jeep that will probably nuke itself soon under their lack of maintenance. You can't fix stupid.

Hard to fix poor as well, who usually rent dumps and end up only qualifying for "buy here Pay here" type of loans, on what are usually crappy cars. Now they have payments on two crappy vehicles, one non running, maybe with a major problem. A vicious cycle.

The biggest irony in all this goodness, was that nearly forever, making time payments on relatively expensive mechanics tools, was offset by a decent paying mechanic job, to pay for the tools and living expenses.

Not really the case as much these days, it seems.

 

[nadogail]

Neither be a borrower or a lender be.
Ben Franklin

 

[1Bad55Chevy]

Wouldn't it be easier to focus on a better clientele rather than dealing with bustouts day in and day out?

You have to understand the car business.

Good credit customers buy from franchise dealers new and used. Good credit customers see ALL independent dealers as shady lots that sell OD roll backs, broken cars, and undisclosed salvage vehicles. They assume the techs at a franchise dealer go through their used cars and fix all the issues but in reality nobody looks at them.

If you provide outside financing at a independent you are still selling cars to low credit customers typically. When you sell to low credit customers the banks like CAC and Westlake add a ton of fees on the dealers that you cant pass onto the customers. Say you buy a truck for $15k and your trying to retail it for $18k the bank might only approve the customer for $15k so you have to try to make the difference up on the down payment which can be impossible. On that same deal you might get $1,500 down then with tag and title the financing to bank will be around $18,500 plus 24% interest at 5 years. So the bank looks to profit the $3k on the front end and probably like $13k in interest while the dealer maybe made $1k. To top it off you have to compete with the franchise dealers on CarGuru on price which is impossible. Franchise dealers buy their trades around 70% of auction value so they got you by the balls out the gate. With BHPH you keep your markup and the interest. Its all a rat race... it comes down to you either chase sales for almost no margin or do you chase the payments, its up to you.

 

[Steve_P]

The franchise disclosure document I saw from Snapon said the average margin on tools was ~33% or so. A healthy margin for a typical business, but smaller than i would have expected.

Maybe the average is, but on basic hand tools it has to be waaaay above that. I've bought probably ten new Matco and Snap On ratchets on Ebay for 30-45% off list. Meaning the margin has to be 50-100% on things like ratchets, screwdrivers.... for the dealer. On high $ stuff like a $1k ball joint press, $2k wrench set... then yeah, much less.

Didn't you show that the student price was like 50% off list on some stuff you bought?