Dealer track certainly changed how the sales and finance departments approached consumer credit over the years. Most of the current managers in the industry cannot remember anything except the Dealer Track process.
Prior to electronics the customers had to complete a lengthy customer statement also known as a customer credit application. This document might very well predate the credit scoring system we all seem to rely upon.
Consumer credit is far more complex than a simple number on a credit score card. The credit score does not consider of the amount of the customer’s net worth. I have heard push back from current managers telling me that they would not disclose that information on a credit application so why should their customers do so?
To them I say this, your customer is asking the lender for a loan for a luxury item that cost more than one hundred thousand dollars. Would they themselves loan the customer an amount of over one hundred thousand dollars knowing only their name, social security number, and credit score? If the answer is anything but no, they need to rethink the answer.
Lenders want to feel secure in the knowledge that the customer has the resources to repay the loan. The lenders rely not only on past credit history, but also upon the character and stability of the customer. Let’s not forget that every lender regardless of what they say, or advertise, likes the customer to be in an equity position upon entering the loan. So, the advance is important. Does this mean that lender do not approval of over advances? No, some lenders still approve deals with over advances. They do so for customers with a strong credit profiles and have proof of liquidity.
The question become who is best suited to conduct a credit interview and when is the best time in the deal for the credit interview to occur?
In many dealership processes the sales associate may take the credit application for speed and adding some cement to the deal. The sales manager usually will run the credit bureau so they can quote payments that are reasonably close to what they will end up at. Best business practice is to get the finance manager involved in the deal as soon as possible any time the credit bureau shows any areas of concern, or the sale manager has a need for clarity regarding the customer’s credit profile.
After all, it will be the finance manager in most cases that will interact with the lender, and it is they who will need to communicate the customer’s story to the lender. Just as Joe Friday said on television so many years ago, “Only the facts sir…”
All credit discussions should be done in an office with a closed door. No one likes having their credit wounds discussed in an open showroom. Each customer deserves to be in a non-threatening environment when discussing past credit issues.
The finance manager should introduce themselves as the dealership personnel who works with the lenders to secure financing. Since the finance manager is new to the transaction, they should ask for permission to discuss the past credit profile with the customer. The finance manager does not know who is accompanying the customer on this purchase. It could be a spouse, it could be a best friend, it could be someone they just met in a bar. The idea is to leave the customer in a face saving environment both physically and mentally.
When the customer grants permission to discuss the past credit issues, then the interviewer may proceed and write down notes. No, we cannot show the credit bureau to the customer, because the dealership is not a credit reporting company. To do so is a violation of the dealership’s subscriber agreement with the credit bureau service that you are signed up with. The dealership is a subscriber to the credit bureau service. Only credit reporting companies can share printed information with the customer, and they can only share the information which they input into the credit reporting system.
When conducting the credit interview remember everyone has a story. What happened to them or their family? What was the root cause of the credit delinquency, or charge off? What was the reason for the judgement, or bankruptcy? How did they correct the situation? Are they current on all their obligations now? Is the credit application complete? If not, ask the questions and get the document completed.
Make notes, ask for proof of payment, or proof of the medical bills, and insurance payments.
During the interview ask the customer for proof on income, bank statements, retirement account statements, do they own any real estate? Do they own any contracts they are collecting payments on? Does the credit bureau show all their obligations? Do they have any additional assets that can help you build a case for the lender?
We have all seen cases where the sales manager cannot move beyond the credit score of 790, and they have the customer on a high dollar unit with no comparable credit. Does the credit profile show any comparable credit? Use common sense, is the customer on the right coach for their situation?
Timing:
Obviously, success is closer when the finance manager can see the customer during the first visit when they are in write up process. Some dealership sales associates fail to get the finance managers involved until the customer is ready for delivery. If this is the case within your organization I would ask you to rethink your current process and make some changes.
My words of council are this: When the sales manager works in tandem with the finance manager(s) the dealership is maximizing their talent for the sales department. Finance professionals can often be the difference between holding full gross in a deal, and having to deduce gross profit to save a deal. Finance managers often have a “Go to lender resource” that can assist a deal when the customer has special circumstances. The sales manager and sales associate may not know about these resources. Communication between the managers are key, in maximizing production.
Good Luck and Good Selling!
Article written by: Jan Kelly, President of Kelly Enterprises. She is an educator and consultant, convention speaker and writes frequently for industry publications. For information about educational venues call 800.336.4275 or visit www.JLKelly.com.