Auto Dealer Monthly, September 2013

SPECIAL F INANCE ITS A WIN WIN WIN Special fi nance guru breaks down his process for desking a deal that works for you your customer and the fi nance company He also delves into lender relations and more One of the biggest challenges for special fi nance pros is desking a win win win deal one that works for the customer the fi nance company and of course the dealership Without direction a subprime customer can inadvertently be steered toward a vehicle that just doesnt work So what should you do Lets assume that your salesperson has properly asked a qualifying question or questions and determined that his or her customer does not have prime credit He or she has brought the customer inside completed a credit statement and conducted a quick credit interview Th e deal then goes to the desk which could be the sales manager fi nance or special fi nance manager Th is person must be aware of which fi nance companies are not concerned with look to book or approvalto book ratios Th ey should also know which companies will give you a quick decision Now it is time to pull the applicants credit report from the bureau that is predominantly used in the area where you and your customer are located Depending on the customer or the information on the fi rst bureau you may need to pull multiple reports At this point savvier managers will almost instantly have an idea of who will approve the deal and at what terms For others the credit app and bureaus may simply indicate how tough it will be to get an approval STRUCTURAL CONCERNS Regardless of the level of experience deal submission portals such as Dealertrack and RouteOne really make the process easy I suggest using a generic deal structure to submit applicants to the companies that can provide an instant approval Th is generic structure would be on a vehicle with a 14000 sale price use a much less costly vehicle for very low income customers and a loan to value LTV ratio of no more than 104 percent Keeping in mind the various companies minimum credit cutoff score and the fi nance companies in your arsenal send it to Capital One and at least one of the following Ally GM Financial Americredit Exeter Santander and Wells Fargo If I wasnt sure the deal would be approved by one of those companies 18 AUTO DEALER MONTHLY SEPTEMBER 2013 and assuming I had a lower tier national or regional specialist in my arsenal I would submit the deal to one of them as well By this time you will have an answer back from at least one and likely more of the top tier fi nance companies At this point especially for those less experienced desk managers you should have the direction you need If its a top tier you should have an idea of what type of deal the customer is going to qualify for If not you know you have more work to do Meanwhile the salesperson should be sitting with the customer not camped out with the manager If you have a top tier approval the manager can then propose a price range or a group of vehicles the salesperson can suggest to the customer In other words dont show them the steak if all they can qualify for is a hamburger It is quite possible your only option will be through a lower tier specialist which means you will most likely focus on a lower priced and lower payment vehicle If a top tier fi nance company does not make an off er or it is an off er on a less desirable tier or structure then it is time to dig deeper Again using the generic structure and your knowledge of the programs of other companies submit them to the two companies most likely to approve under the most favorable terms Th ese call backs will generally take longer as well Once the salesperson and the customer have found a vehicle the customer is excited about buying the desk should structure the deal and it should do so based on the dealerships sale price the chosen fi nance companys approved LTV structure and the down payment needed to make up the diff erence Th is is the fi rst off er Th e salesperson will learn how much cash the customer has to put down obviously the more the better Th en it is time to get a fi nal approval by rehashing the deal with the chosen companys credit analyst During this time the deal will most likely get tweaked It could be the fi nance company enhancing its approval the dealer cutting the deal or the now motivated customer bringing more cash to the table or selecting another vehicle Once you have a structure that is acceptable to the fi nance company the customer and the dealership you have your win win win deal one that all parties are happy with Is it always this simple Certainly not But this approach will help avoid upsetting your customers by trying to sell them a vehicle for which they can never be approved You will also be less likely to poison your relationships with your fi nance companies by shot gunning deals and in the end optimizing every opportunity that comes to your store Until next month great selling th sking win g wor er nanc he fifi nan d d An 18 year former dealer principal who has been focused on special finance since 1989 Greg Goebel is the CEO of Used Car University LLC He serves as an industry consultant trainer author and speaker and has taught his special finance win win win strategy to more dealers vendors and finance companies than any other trainer GoebelG@ AutoDealerMonthly com By Greg Goebel