F&I and Showroom, March 2018

www fi magazine com 36 F I and Showroom March 2018 MAD MARV T Things have certainly changed quite a bit since I started in F I Back then the job was far simpler and quite frankly a lot of fun There were no menus FICO scores or laser printers We simply developed great relationships with bank buyers But then along came tighter regulations increased paperwork and the internet Overnight it seemed the job slowed to a crawl I started out at a General Motors store where our primary finance source was General Motors Acceptance Corp GMAC As I recall it only had four tiers of approval levels A B C and D You could pretty much write off any pending deals in the D column unless it was below invoice or current book values In fact they werent very keen on approving many deals above MSRP However they were pretty good at working with you to make deals fit into better tiers And since my GMAC office was right across the highway from our store getting to know the buyers and processors was the key to my success I cant say enough about those banker relationships In fact they often relied on our judgement in their decisions And that trust went a long way in making deals happen and to some degree it still does See a lot of what I learned back then was the importance of lender guidelines What may have been a straight up approval at one bank could be a turndown at another And while that is still true today most finance companies use similar approval guidelines when considering a deal In fact you can just about predict which banks will approve a deal based on past experience Sure we all get surprised sometimes But one thing Ive learned in my years doing this is the best chance of getting a deal bought especially for credit challenged customers is proper structure So what do I mean by proper structure Well it simply means working a deal with the right balance of trade equity and cash down so the deal makes good sense from a risk standpoint Finance sources will quickly tell you the more of these two investments the customer has in the deal especially the latter the better your chances are of getting a good call Good desk managers understand this They make every attempt to structure deals properly to improve their chance of a good approval the first time In turn a smart salesperson works customers on the right car and diligently asks for cash A recent customer fell for a low mileage 2011 Ford Ranger He had a zero credit score The salesperson worked him for cash down to get as close to book value as he could I finally persuaded a finance source to take the deal at a high interest rate We had to pay a hefty acquisition fee and agree to a shorter term With no back end products it wasnt a tasty deal for F I but it was a deal we didnt have when we started Here are a few other things to consider that will increase the odds in your favor Switchback Have a Plan B in the form of a similar car that might book out better Dealertracks SalesMaker function will help Co X A qualified cosigner can sometimes be the difference between a deal or waiting for the next up The risk factors diminish when you add some help Show me the money Even though the customer has filled out the credit application it never hurts to ask if there is more documentable income Less is more If you were the bank how much risk would you assign to this customer Offering a shorter term can sometimes improve your odds Banks have all sorts of algorithms they apply to determine probability of repayment and the length of the contract is high on those calculations These are just a few ideas to help you improve your game You might be surprised how many more deals can be put together with just a little work and forethought Good luck and keep closing ABOUT THE AUTHOR Marv Eleazer is the F I director at Langdale Ford in Valdosta Ga Email him at marv eleazer@ bobit com Proper Deal Structure Moves Mountains His Madness has a simple but powerful piece of advice for newbie F I managers and those struggling to adapt to the way finance sources are rating credit challenged car buyers BY MARV ELEAZER SO WHAT DO I MEAN BY PROPER STRUCTURE WELL IT SIMPLY MEANS WORKING A DEAL WITH THE RIGHT BALANCE OF TRADE EQUITY AND CASH DOWN SO THE DEAL MAKES GOOD SENSE FROM A RISK STANDPOINT FINANCE SOURCES WILL QUICKLY TELL YOU THE MORE OF THESE TWO INVESTMENTS THE CUSTOMER HAS IN THE DEAL ESPECIALLY THE LATTER THE BETTER BETTER YOUR CHANCES ARE OF GETTING A GOOD CALL