Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.
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By Greg Goebel SPECI A L FIN A NCE FUNDING FUNDAMENTALS Unfunded deals make life diffcult for you, your fnance companies and your customers. Our special fnance expert lays out a foolproof process for quicker funding. any luck, it arrives on Tursday morning and it���s in the funder���s queue that afernoon. Te funder makes sure all of the stips are in place and makes a few calls to verify income, residence and insurance. If everything goes smoothly, the deal is approved sometime Friday and the funder submits a request for an EFT. On Monday, an e-mail arrives to tell you the EFT is on the way, and the money is in the bank when you wake up Tuesday morning. Sounds easy, right? Well, it ofen is. But the devil is in the small details. If Tursday and Friday don���t go well, all the work you did on Tuesday and Wednesday goes out the window. CREATE A PROCESS Te best way to get funded quickly is to be absolutely sure every stip is accounted for before you submit the deal. As a former dealer, I know that���s not always possible. I spent 18 years on the retail side and delivered more than 11,000 subprime deals. We didn���t get to that number by letting customers walk away just because they forgot to bring in their phone bill. But we didn���t make life hard on our f nance companies, either. Afer doing our homework to be sure there 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 40 ��ISTOCKPHOTO.COM/SHIPOV I have spent much of this tax se season on the road, working w with dealers to improve their sp special f nance processes. Te ye ye year is of to a great start, but I ha ha have noticed a disturbing trend: Te number of contracts in transit is on the rise. Te deal has been contracted and signed. Your customer is speeding around town in his or her new ride. But you have yet to see the cash. Why? Te answer most likely lies in your own approval process �����or lack thereof. Banks and f nance companies ofen brag about how lightning-fast their funding is. Te reality is they won���t write a check or send an EFT until the deal is complete. If you don���t have a system in place that allows you to contract deals properly, and if that system doesn���t make you tick of all the stips each f nance company needs, your contracts in transit will continue to pile up. Industrywide, it takes an average of 14 calendar days to get a deal funded. You can do better. Te benchmark is seven days. Let���s say you sell a car on a Tuesday afernoon. You���re not really thinking about getting the deal shipped that day and, in any case, somebody has to review it f rst. So you send it overnight the next day. With AUTO DE ALE R MONTHLY ��� APRIL 2013 was no indication of fraud, we delivered the customer and had a process in place to collect the stips. Yes, we were taking the risk that the deal might have to be reeled in. We felt comfortable with the prospect of losing one out of every 20 deals. You will have to decide what works for you. I recall from my days as a dealer that many of our competitors weren���t comfortable with any level of risk. I know because we sold a lot of cars to their customers. We worked with 54 lenders and had the perfect inventory for special f nance, so all we had to worry about were 54 diferent sets of rules. Some f nance companies provided their own checklists, and we used them. We even stacked the stips in the exact order they were listed on the checklist. Remember what I said about Tursday and Friday? Te funder���s queue is full of deals, and they all have to be reviewed. But funders are ofen paid on a performance incentive. Tey���re looking for deals they can fund quickly. I knew that if we put a little extra efort into the packaging, our folders would start to move to the top of the stack. I can even remember a few cases where we submitted a stip afer the deal was approved and the funder swore it was there all along. We created two forms for the f nance companies that didn���t