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 IT'S A WIN-WIN-WIN Special fnance guru breaks down his process for desking a deal that works for you, your customer and the fnance company. He also delves into lender relations and more. One of the biggest challenges e th fo special c for special f nance pros is deg "win sking a "win-win-win" deal — that works a wor o one that wor for the customhe nanc n er, the f nan company and, of nance course, r d course, the dealership. Without direc tion, c o direction, a subprime customer d can inadvertently be steered toward a vehicle that just doesn't work. So what should you do? Let's 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. Te deal then goes to the desk, which could be the sales manager, f nance or special f nance manager. T is person must be aware of which f nance companies are not concerned with look-to-book or approvalto-book ratios. Tey should also know which companies will give you a quick decision. Now it is time to pull the applicant's 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 f 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. T is generic structure would be on a vehicle with a $14,000 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 cutof score and the f 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 wasn't sure the deal would be approved by one of those com- 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 18 AUTO DE ALE R MONTHLY • SE P TEMBE R 2013 panies, 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 f nance companies. At this point, especially for those less experienced desk managers, you should have the direction you need. If it's 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, don't 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 f nance company does not make an ofer, or it is an ofer 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. Tese 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 dealership's sale price, the chosen f nance company's approved LTV structure, and the down payment needed to make up the diference. T is is the f rst ofer. Te salesperson will learn how much cash the customer has to put down; obviously, the more the better. Ten it is time to get a f nal approval by rehashing the deal with the chosen company's credit analyst. During this time, the deal will most likely get tweaked. It could be the f 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 f 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 f nance companies by "shot-gunning" deals, and in the end, optimizing every opportunity that comes to your store. Until next month, great selling!