Article

University Ford's Unique Philosophy About Special Finance

August 2006, Auto Dealer Today - WebXclusive

by John Carroll - Also by this author

When a woman walked onto University Ford’s lot in Durham, N.C. recently looking for a particular used car, she quickly wound up in the hands of special finance chief Jeremy Collins. Still in bankruptcy, she couldn’t qualify for the vehicle she wanted. But unlike just about any special finance department in the country, the customer wasn’t pointed to another vehicle on the lot. Instead, she was counseled to wait two months until her bankruptcy had been discharged and then come back to get what she wanted.
“A lot of dealers would say that’s not good business,” says Collins, “that you should get the deal signed. That’s old school.” Collins, though, has no interest in old school rules in the world of special finance. He prefers a new philosophy; one that puts the customer first and is willing to risk losing a deal today in exchange for creating relationships that spawn sales for months and years to come.

“Too many special finance departments are bullies,” says Collins about his four years on the special finance side of the car business. “They say, ‘This is the car you can get, and that’s all there is to it’. My philosophy is, ‘This is what I can do, this is what you want and this is what we need to put it together. Sales increased 100 percent when we let the customers choose.”

Old school: “A customer gets approved for a car they don’t want, for an amount that will only give them a car they aren’t happy with.” If the customer protests, the special finance department tells them it’s in their own best interest to go ahead and do the deal so they can start to rebuild their credit score. Collins’ school: “We give them options on how they can get the car they want. We obviously do not want to sell a car that isn’t close to what they want. It leaves a bad taste and generates no referrals, and that’s our bread and butter.”

The bankrupt customer came back after two months and got the car she wanted. She was quickly followed by all of her sisters, a cousin and a pastor. “We sold seven cars because we gave her an option. She just had to wait for her discharge.”

That one story is just a sample of what the new special finance philosophy has done to sales. “When we started two years ago,” recalls Collins, “we were selling 18 to 20 cars a month.” Now, in his best month, Collins has pushed past the 100 unit mark. Even in the soft fall sales months of 2005, his special finance department can still reliably deliver 80 to 85 sales.

Those vastly improved results are the fruits of his special finance philosophy, and it starts by generally doing everything completely opposite from the way most dealers treat people with a troubled credit history. “We treat special finance customers with a lot of respect, just like a primary finance customer would want to be treated,” said Collins. In most other stores, once a sales person hears that a customer is a special finance client, they want to pull a credit bureau report and see what kind of numbers would dictate a deal. “A lot of people will take them right to the credit machine and then work it backwards.

“We’ll start them out as a regular customer, find out their wants and needs and what they’re looking for and what they’re trying to accomplish. If we can’t do what they want to do, we give them options: I can do everything you’re asking for, but this is what I need for you to do.” That’s the same approach followed be everyone in his department, including his assistant, six salespeople and a telemarketer that sets up appointments.

In addition to walk-ons, Collins’ department relies on the DealerLink Internet program and direct mail campaigns to generate special finance deal leads. “Internet leads are good, but you can’t survive solely on Internet leads,” says Collins. “You need to work the customer base. Most secondary customers need references, and a lot of references are secondary finance customers that are interested in getting into the market.”

Collins didn’t come by his sales philosophy by accident. He worked under William Whitmire at a Greenville, South Carolina dealership where he learned how it all worked. Before that, he had been out in the mortgage world, scrounging for business and – Collins is frank about this – not doing all that well at it. “I got into the car business out of necessity,” says Collins.

Ever since he made the switch, he’s never stopped educating himself on the process. Every month he’ll read another two or three books on selling. “Zig Zieglar, Joe Verde, Grant Cardone; I’ve looked at all of them. I’ve taken a piece out of all of them. It costs a lot of money for books and tapes, but I’ve found it’s really inexpensive to get the education you need to do this business.”

Collins attended the WOSF conference in Las Vegas in 2005. This event put a big emphasis on keeping special finance deals in accordance with the law and that comes with the blessings of University Ford’s owner, Tony Fisher.

“Mr. Fisher is just stringent that we are operating to the letter of the law. There’s no gray area. He doesn’t want to be one of these dealers on television,” states Collins. That kind of investment in training is essential to everyone in the car business. In Collins’ eyes, it’s mandatory for a special finance manager. “If you’re not a good salesman, don’t try to be a special finance manager. You’ll have inexperienced salesmen working with you, and a lot of times you’ll need to rework the entire deal after you get it.”

Being honest with customers is just the start to running a successful special finance operation. You also have to take the same approach to your lenders. “The main thing about the loan side is to keep it above board. A lot of special finance managers try to cut corners. They try to do deals that really aren’t deals. They try to hoodoo their lenders, and the lenders always find out, and then you lose trust with your lenders.”

Maintaining that relationship also requires managers to keep a close eye on their sales people. “You get sales people who came from other stores who did things below board,” says Collins. “You just have to double check, because you want your reputation to stand on its own. In the car business you have nothing else. If you keep your reputation clean, you’ll always have a position available to you. But if you cut corners, do things the wrong way, you’ll find deals and doors closed.”


Don’t spread yourself too thin when you are establishing your lending relationships. Special finance reps will flock to your doors, but it’s up to the special finance manager to pick the ones that will help build their business over the long term. Limit yourself to five or six lenders and make sure each can rely on a steady stream of business. “Make yourself valuable to the lenders and they’ll do more for you.”

If you have a customer that needs a special rate to make the deal work for them, you can call the lender and say this is what I need to make the deal work for my customer. For a dealer that sends a lender 1 or 2 deals a month, what incentive is there to make you happy? But if you offer consistent business, build good relations, and make the call to ask for a point on the rate. He’ll say, sure I can give it to him.

They’ll be particularly enthusiastic when you’re sending deals that involve the right cars. Inventory is the key to everything. Late model vehicles are very good. Banks are more willing to finance them. Customers are more willing to buy them. With late model program cars still under warranty, you also don’t have to invest as much in it.

New bankruptcy laws that make it more difficult to discharge debts through the courts have helped fuel Collins’ special finance business, at least for the short run. “There are more people in the bankruptcy side than in previous years. Right now there’s obviously a huge influx of discharging Chapter 7s that are trying to get new vehicles after they lost vehicles to the bank. That’s the rush.”

But unlike many other special finance directors around the country, Collins isn’t convinced that once the current Chapter 7 boom runs out the steam will seep out of the used car business. “I think you’ll see more lenders go to open Chapter 13. I think it will affect the lenders more than it will affect us. There are few that will do an open Chapter 13 now, but in the future more will do that to capture the business.”

About the only major trouble sign that Collins’ can make out is the steady rise in interest rates. That may prompt his lenders to start jacking up rates as well, and that could make it harder to put a deal together in the future. However, bad economic news overall just seems to create the foundation for a better special finance niche. That’s been especially true in Collins’ region, where the tobacco industry has been declining steadily. Now that the regional economy has been showing some consistent signs of a comeback, there will be a lot of job-holders with bad credit histories out looking for a new vehicle. And with a steadily growing market of secondary finance customers crowding out the primary finance customers, Collins has every reason to believe that 2006 will still set another record for special finance.

Vol 3, Issue 2

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