August 2008, Auto Dealer Today - WebXclusive
We all get that overwhelmed feeling when thinking about the state of economic affairs in America today, and if you are there, you’re probably not going to like what I am about to tell you. In fact, not at all.
Stop complaining and take action. Identify the problem; then get right to the solution. The problem is not just all the changes finance companies are making or the extraordinary gas prices of late. The finance companies have simply responded to the customers’ performance. And as for gas prices, we aren’t even close to matching Europe’s prices yet. It cost more to fill a Harley in England than a car in the states.
It is not as though someone at the helm of a bank just got out of bed and said, ”What a fine day to make every finance manager‘s life difficult!” You really have to look at the root of the problem and then adjust.
Some of you have been making a more than respectable living in the automobile business for some time now. So, when it comes right down to it, how much different are you than your doctor, lawyer or CPA? When I go to my doctor, I expect him to be up-to-date on everything that will make or keep me healthy and alive. You should do the same. Study your craft to stay current!
It all goes back to the customers and how you, the staff and the dealership, handle them. This is, hands down, the worst credit environment I have ever seen in my career. What is even more frightening is that many of the potential buyers I interview do not care – they don’t show even an ounce of emotional reaction to the situation they have created. We have arrived at the generation of consumers that does not take responsibility for what it has created, and the finance companies are responding accordingly. They ask, "Will the buyer be able to fill the gas tank, make the monthly payment and pay the insurance?" And as much as you do not think it should be the seller’s problem, it is. If we want to sell cars and a lot of them, then we have to get with the program and figure out what everyone wants and needs from us.
I have been taking the time to speak with many of my finance company partners over the past few months and trying to look through their eyes. I want to understand why they are cutting back on certain vehicle advances, payment to income, minimum income requirements, raising rent factors, etc. I want to take the time to learn more about their new programs and make sure I have all of the necessary finance companies in line to get the job done.
Do you know who will buy a 400 score? Do you know who will still take a minimum income of $1,400? Do you know who will take current job time under six months, job gaps, double bankruptcies, open Chapter 7s and 13s? Do you even know who loves late mortgages? Well you should. It is your job to know!
I look at hundreds of applications a month. I work the desk, take many TOs and do tons of credit interviews. Sometimes, what you know is really only what you want to see. Change happens right under your nose, and if you do not pay attention, you will find out you don’t know what is really going on anymore. Think about the credit we are looking at now. Multiple BKs, repos and phone company charge-offs are starting to look like staple members of the basic food groups. What it all comes down to is controlling the paper from cradle to grave. If you do your job upfront, your chances of getting it hung and thru funding are much greater.
I’ve received calls from many finance people around the country saying that they are getting their butts kicked. I know I am working harder than ever, so someone new at this must really be white-knuckling it at this point. I have an advantage because I was groomed in this industry to know that the finance companies are my partners in business. Over the years, I learned that it is very important to watch how my portfolios perform and to monitor my relationships with every department inside my finance companies’ domains (even the funding departments staffed with people I never meet in person). I want to know how I affect their pay plans too with things like look-to-book and what type of paper I am placing with each different company. It is not really just “all about me.”
To sum it up: study, study, study! Learning relationships is more than half the game. Each deal stands on its own merit. Oh, and let us not forget attitude. When I see a mortgage that is three, four or five months behind, I know I can get this customer done with a reasonable fee, a decent advance and most stips waived. My sales associates think I am insane when I say, “Awesome! This will work!” I love their faces when I show them the approval. It always cracks me up. What are you thinking or saying when you see that on a credit report? There are resources you have to find them.
You see, I study my art, and, yes, moving cars in this economy has become just that—an art. I do not look at what I cannot do, but what I can. We will all get through these troubling times if we are strong, understand the issues we’re facing and embrace what we have to do.
Special Finance Insider Vol. 2, Issue 4