All Credit Applications Will Be Accepted - written by Daniel Sitter

What a ridiculous statement which actually says absolutely nothing directly, but indirectly is intended to deceive the unsuspecting. The statement would lead one to believe that upon filling out a credit application, credit is granted and the item you desire to purchase will soon be yours. This statement actually says: Go ahead and fill out this application and we will receive it from you. If everything is to our liking, we will secure you a great interest rate quickly and enable your purchase. If you are less a desirable risk than we would like, we likely will forward your information to a local credit company that specializes in high-risk credit. If you do succeed with them, you will likely have an extremely high interest rate and a very expensive transaction. Regardless, you will probably leave here with a smile if you get the item you wanted.

Every time I read or hear that statement made, usually by car dealerships in their television ads, I cringe. This sales practice bothers me because I feel it is unethical to prey upon the ignorant, taking advantage of their need simply for profit. Deceit is not an acceptable business or sales practice. That is not the way to successfully operate your business, especially in the long run.

I know a person who owns a prominent music store where a variety of lessons are offered in addition to a broad selection of musical instruments. The owner, Bob, once told me that the single, most profitable portion of his business was the credit applications that he accepted on behalf of his customers, especially students and their families, to purchase instruments. These persons were typically those that were often without savings or credit cards, but were able to make weekly payments. Upon completion of their credit applications, Bob would fax them to a local credit company with whom he had made prior arrangements. They paid him handsomely for these applications, typically receiving dozens each week. His customers did not know that their credit applications were going elsewhere.

Bob earns big profits on these customers in four ways:

1. He never discounts the instruments or music as he would to "cash" customers, making a high initial profit each sale.

2. He earns a substantial commission for referring the customer for credit.

3. He earns ongoing profits on the lessons purchased.

4. These "satisfied" customers refer others to Bob to meet their needs, continuing the cycle.

Earning profits and having satisfied customers are good things, but honesty and integrity should not be sacrificed in the process. If Bob was up-front with these customers about both the source of credit and the cost of such credit, then the customer could make an informed choice. Bob's practice is deceitful and inherently wrong, a practice likely to catch up with him in the long run.

Be honest and up-front with prospects and customers. Look out for their best interests. It is better to walk away from a sale rather than complete it while sacrificing your integrity.