Negative Equity 101: A Primer for Powersports Sales Teams

powersports unit trades


Everyone talks about trade equity, but what happens when that equity isn’t positive? Assuming that a customer has a Powersports unit to trade, but they’re upside-down on their loan because of a poor financing deal, how are you going to both help them get out from underwater and keep your own profits afloat? It's a delicate balancing act, but it’s one that you can train your team to handle in any situation. You won’t come into as many situations with negative equity and upside-down loans in the Powersports industry as you do in the auto industry, but it does still happen and you need to know how to handle it if your business is going to succeed. Powersports Unit Trades are everywhere you look.

It is still possible to take trades where customers are upside-down on their equity and make money from them if your team knows how to make the best deals. It may be harder to help customers get the units that they want if they have a negative trade to work with, but it isn’t impossible. Depending on their credit situation, some customers may end up getting financing for their new unit that will also cover what’s owed on the old unit after the trade value has been taken out. The only problem here is they start out upside-down again, but this may not matter as much to those who intend on paying off their loan sooner or refinancing when they get the chance.


There's a lot of accounting talk in the equity world, but you don’t have to get overwhelmed by the math and logistics of it all. Just make sure that your team knows the balance in taking negative equity trades and how to help customers still get a reasonable deal without tanking your profits completely. There is no ‘tried and true’ method for handling negative equity trades, and some Powersports dealers won’t even work with them for one reason or another. However, if you really want to give your customers the chance to become lifelong supporters, helping them out of a bad situation is definitely a great way to get off on the right foot.

The best thing that you can do is to put in a standardized training program and operating procedures for handling Powersports Unit trades, including those with negative equity. When you hold everyone to the same standard and provide them with the training that they need, you will be able to know that they are doing the best for your dealership when it comes to taking trades and still helping customers get the deals they deserve.


Some customers might even assume that they can’t trade because they are upside-down on their current unit’s loan and therefore won’t recoup what they need. When your team is trained to deal with negative equity, you’re opening up a new world of possibilities for people. That also opens up a whole new world of possibilities and profit potential for your Powersports dealership.

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