Strategies To Make Deals Stick in 2006
It takes a concerted effort to turn around the turndowns and fund the deals with less than average credit scores. The strategies you employ to help you make your case with lenders can make the difference between a good start and a great start in 2006.
Strategy: The sales manager and sales consultant make a concerted effort to involve the finance manager early in the deal. The perfect time to bring the finance manager into the deal is right after you pull the credit history. The finance manager is positioned to ask the customer for documentation prior to delivery. A well-trained finance manager is prepared to uncover the reasons for a customer’s past credit difficulties in order to make a case for funding with the right lender.
Strategy: The finance manager conducts a thorough credit interview with the customer. A careful interview and the right vehicle match-up go a long way to help the customer save face. The finance manager must make a concerted effort to be sensitive to the feelings of the client while obtaining the details. If the credit interview occurs early in the sales process, the sales manager may be able to direct the customer and sales consultant to a different vehicle.
Strategy: The customer can write a letter to the lender. No one likes to divulge financial difficulties, and the facts of the matter can create embarrassment. Some customers may want to write a personal letter to the lender that describes past credit difficulties, identifies corrective measures they have taken to improve their credit situation, and explain why they are now a better credit risk for the lender.
Strategy: The finance manager adheres to the seven Cs of credit – to turn a “no” into an opportunity for the dealership and the client.
Non-prime lenders look at many factors in evaluating credit risk, including the seven Cs of credit:
1) Credit history – How has the customer paid his/her obligations in the past? Have you made direct inquiries to verify the details?
2) Credit bureaus – Is there a specific time frame for the credit delinquency?
3) Collateral deal structure – Will the customer feel any pain if the loan defaults?
4) Character – Do you have at least five to 10 years of work and residence history for the customer? Do you have additional references, including two closest relatives not living with the customer?
5) Common sense – Write down at least five reasons why this should be a fundable deal before you pick up the telephone. Be prepared to discuss the merits of the deal and the customer.
6) Capacity – Does the payment fit the budget? If a customer is going to be successful at repaying a loan, the obligation must be reasonable. The numbers must fit.
7) Communication – Do not push the loan underwriter to make a decision; do not lie; do not talk down to the lender. Remember, they are in the business of making good loans. Give them reasons to say yes.
Step to success: Depending upon your sales system, the best step you can take to guarantee success is to get the finance manager in front of each and every customer before they leave the dealership.
It takes a concerted effort to turn around the turndowns and fund the deals with less than average credit scores. The strategies you pick should give you the best chance of making the deals stick – in 2006 and beyond.
World of Special Finance – Canada, January 2006, p. 6