Snap-On dealer taking a loss . . .

[wreckercologist]

This sort of thing hurts everybody in the long run.

We extend credit to customers at work. As things are now, we don't accept checks but from a few people we've know and done business with for years, and usually require a CC or cash. It would really surprise you how many guys running a towing business have maxed out CC's, crappy credit ratings, ect. As a result, we have to tighten who we give credit to, and raise prices.

I'm sure mechanics are no different. I have plenty of debt, but make my payments.

Selling tools can be risky, but so is everything else.

 

[mrshaun]

Seems like truck dealers are a lot like police officers, They get lied to, scammed and BS'd all the time then eventually get a nasty attitude from it. If I was looking for the deadbeats and had no other help I think I would talk to a bail bondsmen. They know how to find people.

wow you hit the nail on the head with a BIG hammer.
we get more excuses from some guys than I could shake a stick at.
I did have family that wiorked in the sheriffs dept and they would check people out for us, usually those that had absconded with a big pile of tools.

my guys that are over 10,000 pay their bills well. my 27 year old has already paid 1400 bucks this month towards his account and is 1700 ahead.
my other ones pay weekly and pay more than they are required.
I do limit some people as to what they can buy,. I had to tell one kid straight up that he could only run 50 bucks at a time until he could pay more than 10 bucks a week.... his cigarettes were running 25 bucks a week,.
I had one guy quit so he could get his krl1023 and up his payments 25 bucks a week.
so sometimes SNAP ON is good for you

 

[jkeyser14]

If people need $35k in tools to do their job something is wrong. I've got less than 1/10th of money in tools and can do most car repairs. Sure, there are specialized scanners and machines, but the dealers should be buying these, not the mechanics.

As far as tool boxes go, guys who spend $10k on a tool box need to wake up. When is the last time their snap on tool box did a job to made them $10k in profit?

 

[bgott]

My Snap-on guy will sell me anything I want on credit. Hell, he even used to carry the 2nd morgage on my house!

 

[mrshaun]

motorcycle shop tech has a kra2418 with ss top and hutch and a kra4114 kra 4107 combo
has everything metric 1/4 and 3/8 drive
has a scissor lift for the kawasaki mule
has the mm250sl for his at home stuff ( rebuilds old hot rods )
has our entire cordless line of tools.
borescopes
he basically has an entire set of tools at home and at the shop.
the at home stuff is both sae and metric.
he ha bought 55000 in the last 6 years total.
also he has no truck account after yesterdays payment.
he pulls 60+ hours a week at the kawasaki shop here is town and they pay him well to do it. Plus he lives with grandma and he gets everything when she goes. so he has it made. so he spends his money on tools

 

[sk farmer]

good for him. guys like that don't need the credit. the only thing that tells me is he buys stuff that the normal person can't afford. if i lived with grammy and would inherit all her money i could do that to. plenty of guys here working 60 plus hours a week and make good money. trouble is they have a wife, kids, a mortgage, car payments and a school loan. they are having one hell of a time making ends meet. i can't believe you would use a guy like that as a typical example for the rest of us. grammy probably bought his tools to make him happy. edit. i thought what i wrote may have been to harsh but when i came back later to reread i know i am right. directly or indirectly grammy is subsidizing his lifestyle by providing him a home and leaving him better off when she is gone. nothing wrong with that but not exactly pulling himself up by his bootstraps to a garage full of chrome.

motorcycle shop tech has a kra2418 with ss top and hutch and a kra4114 kra 4107 combo
has everything metric 1/4 and 3/8 drive
has a scissor lift for the kawasaki mule
has the mm250sl for his at home stuff ( rebuilds old hot rods )
has our entire cordless line of tools.
borescopes
he basically has an entire set of tools at home and at the shop.
the at home stuff is both sae and metric.
he ha bought 55000 in the last 6 years total.
also he has no truck account after yesterdays payment.
he pulls 60+ hours a week at the kawasaki shop here is town and they pay him well to do it. Plus he lives with grandma and he gets everything when she goes. so he has it made. so he spends his money on tools

 

[chadster1]

I don't understand why dealers are like..... um dealers... like drug dealers.

Tool transactions on a handshake? This isn't the 70s.. get a credit card, or an application for Snap on credit - let the leg breaking be someone else's concern. If you are baiting people into spending a lot when it's YOU extending the credit, then you are gonna get burned sometimes.. I would never put myself in that position.

It is a calculated risk. I try and get as much information on my guys as possible. But when your route is 50% hispanic and a lot of those guys have no SSN, you have to make a choice. Do you severly limit your possible customer base or do you take some chances? In any business where you extend credit, there will be some losses. That is just part of the business. I make judgement calls every day on people. For the most part, my gut feeling has been correct. I make mistakes sometimes and let people get tools that I had no business selling to. Every dealer has done it. I try to learn from my mistakes. I pay attention to personality types. Most con artists are easy to spot once you know the signs. I have gotten to the point where I will flat out refuse any credit to some people and I am not even polite about it. An honest person will understand not extending credit on a truck account. A scumbag will get upset if you dont give him credit, like I am obligated to extend credit just because I drive a tool truck.

I make a good living at what I do but I put in a lot of hours so I am not ashamed to say that I make good money. I have had some guys skip out on me owing money but I will not let myself get into the position where those types can jeapordize my business. The tool business is not for everyone. I appreciate the kind words from the people on here. I know I have had some pissin' matches with a couple of people on here but I hope that most of you can see where I am coming from.

 

[crewchief888]

my hat's off to the dealers than can make a living selling tools.

as stated, you have to be able to read people, scumbags have an "air" about them.
i can spot the guy thats gonna try to walk off with my tools while my back is turned.
ive seen 3 dealers go out of business because of theft. we had 2 kids stealing tools off the truck, and even after alerting the dealer to what was going on, he never confronted them.
my days of tool truck balances of several thousand dollars have come and gone. i set my own limits, usually nothing over $250, and i pay it off, usually within 4-6 weeks.
i have a new SO dealer, only been in business for 6 months or so, he's finally realized i dont want or need every new gizmo/tool he has, and realizes most of the business he's gonna get from me is going to be small purchases.

 

[VegaS10]

When at Circuit City, we had a fantastic truck guy.

All of us bought smaller hand tools, pick sets, weird little pliers, etc. I made sure everyone paid the guy everyweek, no matter how small.

Before we started closing the doors for the last week, I had ordered a small pair of unusual electronics pliers. Even though we were absolutley hectic and pure chaos in the store, he came in through the front, battled all the crowds to find me and handed me my pliers.

I have the utmost respect for that man.

 

[stock z/28]

I still don't understand why they don't use an independent financing source for amounts larger than an a weekly account?

 

[GTO]

That really *****.

 

[chadster1]

I still don't understand why they don't use an independent financing source for amounts larger than an a weekly account?

If you will point out an indepent credit company that will finance tools with the tool dealer writing the contract, I will contact them and set up an account. The one third party company that I know of that does cater to tool dealers will only do a lease. The word lease is foreign to the majority of my customers and when I bring it up the word lease they get scared. They think that they will have to turn the tools/equipment back in at the end of the lease term.

 

[wreckercologist]

If you will point out an indepent credit company that will finance tools with the tool dealer writing the contract, I will contact them and set up an account. The one third party company that I know of that does cater to tool dealers will only do a lease. The word lease is foreign to the majority of my customers and when I bring it up the word lease they get scared. They think that they will have to turn the tools/equipment back in at the end of the lease term.

OK, so would you mind explaining the terms of the lease and what happens to the tools when the lease is up? I would be interested in hearing about the pro's/con's of this arrangment. Is a lease just for single, big ticket items, or can you put together a laundry list of tools to lease? It's a new concept to me, and I've been buying off trucks since 1993 or 1994. Thanks Chad!

 

[stock z/28]

If you will point out an indepent credit company that will finance tools with the tool dealer writing the contract, I will contact them and set up an account. The one third party company that I know of that does cater to tool dealers will only do a lease. The word lease is foreign to the majority of my customers and when I bring it up the word lease they get scared. They think that they will have to turn the tools/equipment back in at the end of the lease term.

Chad, in your area I have no idea of who would handle your interests, locally there are several companies as well as banks that I would think would be happy to offer a credit line to qualified customers

A couple of previous dealers used to use private financing here.

Maybe you can supply more info to your customers about equipment/tool leasing, and its potential benefits, and the fact that after the lease expires its quite easy to arrange ownership of the leased items?



As far as leasing goes I have used leasing to buy quite a few pieces of machinery and would do so again with no hesitation. The buy out terms are generally negotiable and always seemed to be fair, but I would discuss it with a local accountant to see what tax or other potential benefits/liabilities may be?

If there are no options for independent financing, then I guess that answers my question.

 

[Fubar]

If people need $35k in tools to do their job something is wrong. I've got less than 1/10th of money in tools and can do most car repairs. Sure, there are specialized scanners and machines, but the dealers should be buying these, not the mechanics.

As far as tool boxes go, guys who spend $10k on a tool box need to wake up. When is the last time their snap on tool box did a job to made them $10k in profit?

You can't be serious, right? I have over 100K invested and I still spend 300.00 a week and that just keeping up.

 

[tonydanzah]

You can't be serious, right? I have over 100K invested and I still spend 300.00 a week and that just keeping up.

If you didn't have nice box or scan tools and only bought used or craftsman its entirely possible.

 

[poprockcrusher]

snap on credit - if the customer skips - the dealer is responsible
the car business ***** worse than ever , lots of guys losing their jobs
this may get worse

 

[poprockcrusher]

You can't be serious, right? I have over 100K invested and I still spend 300.00 a week and that just keeping up.

the big , fancy box shows you are serious about your job and can get you paid more per hour

 

[blackedv]

the big , fancy box shows you are serious about your job and can get you paid more per hour

you speak the truth there, granted i could get by with a cheap tool box but id rather have a nice tool box that can hold 200 lbs in a drawer and still open with fingertip ease. i have to open my drawers hundreds of times a day so it does make a difference. plus theres a resale value also

 

[joeswamp]

Chad, in your area I have no idea of who would handle your interests, locally there are several companies as well as banks that I would think would be happy to offer a credit line to qualified customers

A couple of previous dealers used to use private financing here.

Maybe you can supply more info to your customers about equipment/tool leasing, and its potential benefits, and the fact that after the lease expires its quite easy to arrange ownership of the leased items?

As far as leasing goes I have used leasing to buy quite a few pieces of machinery and would do so again with no hesitation. The buy out terms are generally negotiable and always seemed to be fair, but I would discuss it with a local accountant to see what tax or other potential benefits/liabilities may be?

If there are no options for independent financing, then I guess that answers my question.

I've always thought that tool dealers act a little like the providers of microloans in developing countries. A lot of these mechanics don't qualify and banks don't want to deal with loans for such small money.

In a previous discussion on this topic, someone pointed out that the fact that the tool costs the same whether you buy in cash or on time is a clever way of getting around usury laws, similar to rent-to-own furniture. If you could order these tools directly on an industrial account you'd find the effective interest to be crazy high and on par with microloans (which is what it should be, these are risky investments for the tool truck drivers).

I imagine it's gotta be tough for the tool truck drivers to reject big sales when a customer is just too risky. Similar to investing in risky stocks with a potential big payoff.

 

[Adam McLaughlin]

I buy everything in cash, every time. Never financed anything on the truck. I wonder how many Snap On Tools can be sold if there was NO financing arrangements made.........

Adam

 

[RbrtAWhyt]

I buy everything in cash, every time. Never financed anything on the truck. I wonder how many Snap On Tools can be sold if there was NO financing arrangements made.........

Far, far less than they sell now would be my bet. Snap-On would have to be more competive in pricing with brands that market their tools towards buyers other than "professional" mechanics.

 

[mrshaun]

they tried that. ace hardware and costco well the licensed ( js products ) tool sell good on ebay too many do not know the difference

 

[A_Pmech]

they tried that. ace hardware and costco well the licensed ( js products ) tool sell good on ebay too many do not know the difference

Shaun,

Can you explain that for those of us not fluent in Snap-On? I'm curious...

Thanks!

 

[JSBriggs]

I'm curious what the interest rate is for a truck or SO account?

-Jeff

 

[Hawk321]

Yes it's hard and that is one of the reasons why I'm done with the snap-on franchise in germany....(among other bad reasons from SO side)!

Anyway, I only buy that what I can affort!

 

[caper]

I'm curious what the interest rate is for a truck or SO account?

-Jeff

I've never paid interest on my truck account in almost twenty years of buying.Snapon corporate credit does charge interest but I've never used the corporate credit side so I'm not sure what the interest is.

 

[GeorgiaHybrid]

Capers experiance with Snap-on is the same that I have known since the early 70's. As long as the driver is giving the credit, there is no interest. If you are buying a box, Verus or something that is over your truck credit limit, Snap-on credit is used and they do charge interest.

They are no different than GM, Ford or anyone else selling high dollar items. They often make more off of the interest than on the sale.

 

[Todd.Brock]

I have bought a few things off the truck, but always up front paid in full. If I understand, a truck account is essentially an IOU between me and the dealer with no interest?? I see the value to I want just cant afford it all at once mentality. Thats a big risk!... Im not sure I could do that to a dealer knowing I could pay for it at once, but decided to make payments anyway.

 

[Skin]

I have bought a few things off the truck, but always up front paid in full. If I understand, a truck account is essentially an IOU between me and the dealer with no interest?? I see the value to I want just cant afford it all at once mentality. Thats a big risk!... Im not sure I could do that to a dealer knowing I could pay for it at once, but decided to make payments anyway.

Agreed. If you needed something on the spot to finish a job, like a new tool you didnt have or a replacement for something that just broke. Then sure, i can see the point to a 'here is what i have now i'll give you the rest the next time i see you' type of exchange. Bit a few thousand worth of tools makes no sense to me.

It would seem to me that if you needed to take out a massive loan for that much in order to equip yourself with tools, you probably cant afford them and shouldnt be purchasing them in the first place. I'd really love a 80-100k sports car and probably could afford the payments but that doesnt mean i have any business owning said vehicle.

 

[poprockcrusher]

I have bought a few things off the truck, but always up front paid in full. If I understand, a truck account is essentially an IOU between me and the dealer with no interest?? I see the value to I want just cant afford it all at once mentality. Thats a big risk!... Im not sure I could do that to a dealer knowing I could pay for it at once, but decided to make payments anyway.

that is how big business works for the last century

 

[JSBriggs]

Wow, really? No interest on a truck account? So with every truck account sale, your margin is eroded by your cost of capital and you aren't even being compensated for the risk. Sounds very perilous. That makes the credit card transaction fees at 3-5% an even better deal.

-Jeff

 

[joeswamp]

I'm curious what the interest rate is for a truck or SO account?

-Jeff

It's invisible, built into the profit margin of Snap-On and the tool dealer, and I believe is the primary reason SO tools are so pricey. The only way you can really estimate it is to find an identical tool that hasn't been rebranded as Snap-on, mark up its retail price to cover the cost of the tool truck delivery and warranty, and then figure out the equivalent interest if you paid for it over time. When I've done this (see this link) I've come up with some pretty big interest rates, like over 150%, which sounds crazy high but is on par with microloans in the developing world.

Note that if SO somehow charged these interest rates separately they'd be violating usury laws in most states. However clearly they're providing a big economic service by allowing these mechanics to start and develop their careers -- the guy who came up with microloans won the Nobel Prize. Makes you wonder if usury laws are a fundamentally bad idea.