Auto Credit Express Blog
May 12, 2008
Put away that shotgun and make peace with your lenders
With the number of subprime lenders scaling back their loan portfolios, it’s more important than ever to start treating the remaining ones better – and that includes the elimination of “shot gunning” deals.
Why would you do it?
Here at Auto Credit Express, we’re still amazed that some dealers practice the ancient art of shot gunning deals. As far as I know, there are only two reasons that a special finance manager would do this:
1. The Special Finance Manager doesn’t know what he’s doing. In this case, the finance manager needs to go back to school and learn the correct way to run the department and treat his/her lenders. I would suggest you contact Auto Credit Express for some serious subprime auto sales training.
2. The Special Finance Manager does know what he’s doing, but he/she is just too lazy to look over the deal to make an educated decision and, instead, sends it to everyone so that they can make the decision for him/her. In this case, the manager is causing more harm than good. I would suggest you contact Auto Credit Express for some serious subprime auto sales training once you have fired the manager and hired someone who is capable of functioning in the new, enlightened era of dealer – lender partnerships.
Establish a relationship with your lenders
While lenders need relationships with dealers as a source of loans, dealers need lenders in order to buy the deals and move the iron. With more and more lenders cutting back on the number of loans and the total dollar amount that they have to lend, it becomes imperative for dealers to cultivate the lenders that they still have.
Every time a lender looks at an application, they incur costs – from the salary of the analyst to the charge for running a credit bureau. Even if the deal gets approved, the lender makes no money if the deal is placed elsewhere. If this happens too often, the costs outweigh the profit potential and the lender will cut you off. Do this to too many lenders and, pretty soon, you’re left with only one or two. Even though they may be your best lenders, what if the parent company (a’ la HSBC) decides to stop lending in your state? It’s happening as this is being written and the results could be disastrous for your store.
The Bottom Line
Treat your lenders as a partner in your business. If you feel that your special finance department could use the best subprime training on the planet, give Auto Credit Express a call at 888-535-2277 or by using our quick contact form.
