BMO launches variable rate product

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By Daniel Moher

BMO Retail Dealer Finance (RDF) is now offering its first variable rate product in the Canadian automotive marketplace. The company said its new loan program, launched in early October, is the “best variable rate loan product in the business.”

“I am proud to say that BMO RDF can now offer the most flexible, sensible and cost-effective variable loan product in the industry to our automotive dealer body across the country”, said Raymond O’Kane, national director of BMO RDF.

The program aims to give dealers the same variety of options available as on the fixed side but with variable rate to maximize flexibility for the end-consumer.

It is offered on vehicle models that are up to five years old.

Variable rate loans start at $7,500 all the way up to more than $40,000. Rate buydowns and deferrals are allowed and the variable rate can be converted to a fixed rate anytime. This fully loaded product had an introductory rate starting at 4.65 per cent and up, depending on the loan amount, term, amortization and the DRF chosen.

“This is the lowest variable rate option currently available in the Canadian market”, he said.

BMO’s variable rate program came late in comparison to other financial institutions in the Canadian auto industry, but O’Kane said that it was to create a variable rate that would offer the best product among all competitors.

“BMO had to ensure this was a product that a significant portion of our dealers wanted, and as a result, would help auto dealer businesses grow. Finally, we needed to guarantee a program whose features coincided with what mattered to F&I business managers most. The best rate, solid dealer referral fees (DRF) and lots of flexibility is what our clients asked for, and now it is what we are offering them.”

O’Kane said when responding to clients’ needs for this product, BMO knew F&I flexibility was key.

Unlike some variable rate products in the market, Mark Moffat senior sales manager said, “the term and amortization policies for our original fixed rates are offered for the variable product as well. This gives the F&I manager more flexibility when hashing out a deal.”

Another one of the added advantages, he said, is the ability for dealerships to buy down the rate to make rates look even more attractive to the end client.

Air Miles Reward Miles are being included with this loan product to F&I managers and dealer principles as long as they are registered collectors.

O’Kane noted that while these options are a big part of trying to make this loan product attractive to dealers, “we understand the main concerns are that the rates are low and the DRF’s are high.”

This is what has been the main focus during the development of this product, and it is how we are trying to respond to dealer needs. And as always we back these competitive rates and reserves with an exceptional customer experience.”