March '17

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90 • RV PRO • March 2017 rv-pro.com B U S I N E S S tional RV lender, then it's important to think outside the box. Many will view non-mainstream lending resources as only sub-prime outlets. However, that is not the case any longer. We have all seen people with good credit get declined due to lack of a down payment, being self-employed, or not showing enough income on their tax returns, even though these customers make all of their payments on time. In other cases, perhaps the deal is over advanced because of negative equity in the trade. Or maybe the customer has had a real estate settlement, and tradi- tional lenders will not touch them no matter how much money they have as an initial payment. In dealerships, I have seen many different attitudes in the finance office. This includes finance managers saying everything from "If I cannot get the deal bought, no one can" to "If the customer did not purchase any F&I products, the manager does not make the second effort in securing the financing." These self- serving attitudes still persist in some dealerships, where they can cost the dealership sales and profits. We must remember what the No. 1 mission of the finance professional is. As a reminder, the prime directive of the finance department is: • To secure the sale and protect the front-end gross profit. • Increasing the dealership profits in an honest and ethical way. • Increasing the customer satisfac- tion with the sale. • Increasing customer retention. • To complete all the legal docu- mentation of the sale. • To track the contracts in transit, and outstanding titles. The job is not done until all the paperwork is in. • From here, the list of duties con- tinue as the culture of the dealer- ship dictates. When communicating with senior management of dealerships I sometimes find myself wondering how many deals are lost because of the personnel egos or lack of motivation? That is a good ques- tion, and one that should occasionally be asked by senior management. Tips to Capturing Incremental Deals The following are some best business practices to ensure that your dealership captures those incremental deals that were lost last year. 1. We all realize that some people are full-timers, and for most lenders full- time status is simply the kiss of death when it comes to securing financing. This is an area where a local credit union, which knows the customers, might be able to get deals done. In speaking with Mary McCarthy of Alliant FCU, she once told me the full-timers have low loss ratios and great credit. I think our lenders should take a second and third look at this market. For those of you agree, you may wonder: Why have the lenders not done so prior to this? My answer is this: When anyone lives in an RV full-time, the loan fun- damentally changes from a retail install- ment contract to a mortgage. When customers default, the lender cannot simply repossess the unit – they must go through foreclosure proceedings. Not to mention, they must have one-year premium of homeowner's insurance in an escrow account. I am sure there are other reasons, but those mentioned are the deal stoppers. The progressive F&I professional should be proactive and develop rela- tionships with local credit unions to fill this space, maybe even nurture a relationship with a mortgage lender. At best, this situation will be a cash deal to the dealership, perhaps with an outside lien holder. 2. Hold "let's make a deal meetings." Last year, did the sales manager and finance manager get together and review every write-up to identify what was needed to make the deal? Did the cus- tomer have good credit and was declined due to a high debt-to-income ratio? Did the customer suffer from negative equity regarding the trade? Was the deal so over advanced that your mainstream lenders could not make the exception? Was the customer on the right unit to meet their needs, and budget? 3. Do you have early morning daily meetings with the sales team and the service and parts managers to review what is going out today and is it ready? Other important questions can include: What does each department need from one another to make the delivery a suc- cess? What is the status of every working deal? What does the finance team need to secure an approval? Who is the deal into for review? How much is the deal over advanced by? Is it into the correct lender for the circumstances? If the customer was on the right unit, but the circumstances did not fit the mainstream RV lenders, then per- haps your team needs to use a non-tra- ditional resource. View from the Lenders' Perspective Let's look at what lenders look at when they are loaning large amounts of money: They look at the net worth of the customer. Simply put, the skinny credit applications that only have the customer's name, address, Social Security number and a signature will not get the job done in these cases. This is not an automatic approval driven by the credit score and credit bureau situation. Think back to the old days, when in a credit interview the finance manager was viewed as the banker who just happened to be in the dealership for the customer's convenience. Back in the day, the finance professional inquired about everything: bank accounts, saving accounts, value of the home, mortgage balance, and credit card balances. The finance manager also asked if anything was going to change in their financial standing within the next 30 days. After all, something could be paid off. Or, on the other hand, the customer might be purchasing a new truck. Additionally, finance managers asked

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