The cost of failing to check customers’ eligibility for motor finance early in the sales process is costing the average dealership almost £8,000 per salesman each year, according iVendi.

The calculation assumes that around 25% of customers are being turned down for motor finance and that the sales person is paid around £40,000 per year including bonuses – but also incorporates a range of other costs.

James Tew, chief executive of iVendi, said: “What we suspect is happening in many dealerships is that managers are not calculating the cost of spending time with prospects who are not creditworthy.

“The fact is that, for some businesses, this is a major expense. One dealer group we spoke to calculated it at nearly £200,000 per year.

“If you wait until the end of the sale, then hours will have been wasted. Fully costed, this could run into hundreds of pounds for each potential customer.”

James said that the simple solution to the issue was to check the customer for finance early on, taking time to speak to customers about their budget.

Tew said: “Our recently-introduced online Showroom Eligibility tool allows dealers to do this easily, sitting with the customer and looking at whether they are likely to be approved by the dealer’s panel of lenders, including possible reasons for rejection.”