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Tactics for dealing with lenders

May 12, 2003
Filed under Archives

Steve and I handled all the F&I business at the dealership where I worked. Steve was the manager of the F&I operation, and I learned a lot from him about working with lenders.
We made certain that we carefully interviewed each customer in the Business Office. We wanted to ensure a complete and accurate credit application, and we also wanted to get some backup information. The more we knew about our customers (especially the marginal ones), the more intelligently we could sell them to the lender.
Let me stress that the only person who discusses the customer’s credit is the business manager. There are many legal ramifications to a dealer who doesn’t adhere to credit laws.
Steve and I were the only ones allowed to send in credit applications. Steve controlled which lender got which credit application. He felt that “shot-gunning” a credit application to all your sources doesn’t build healthy relationships. Steve knew that each application cost the lender money to process. He also knew that lenders become irritated at processing the applications without getting the contracts.
Lenders also will become irritated when a dealership only sends marginal applications (customers with questionable credit worthiness). When a lender has been good about buying an “iffy” contract, Steve would immediately send an outstanding application and contract to make up for it. This was the unspoken “good-will” rule.
Steve and I were the only ones allowed to take a call-back from the lenders. At times, salespeople can become very emotional about their deals. If they take a call-back and don’t like the lender’s response, their reaction can damage lender relationships. Steve and I would protect the lenders from negative reactions by being the only dealership contact for the lenders.
Steve always made himself available to the lenders. If he was contracting a customer, he would have someone take a message and then promptly return the call. When they asked for some additional information, Steve responded immediately. He knew lenders wanted to get each deal done and off their desk as quickly as possible.
When the lender would call back with a decision on a contract, Steve made notes and would always ask questions before he shared his opinion. Steve always asked for a qualification on all call-backs. If a lender declined a customer’s application, Steve would tactfully ask, “What would it take?”
Despite how bad some borrowers might be, usually (a) more cash or (b) a better debt-to-equity ratio would improve their chances of getting bought. He would ask the lender, “Under what circumstances would you buy this customer’s contract?”
Steve would take the lender’s qualification (“Yes, I will buy the contract if…”) and try to get cooperation from the customer to meet those qualifications.
If getting more from the customer didn’t work, Steve would then shop a second lender. If the second lender likewise turned down the application, Steve would communicate the first lender’s qualification. He would then begin to negotiate a more liberal qualification from the second lender. This is called “selling paper.”
No matter what, Steve never lied to a lender. It only takes one lie to destroy a trusting relationship. Just try to ask your lenders for special favors when you have just lied to them. It doesn’t work that way.
Make lenders part of your family
Good lender relationships cannot be emphasized enough. Without your lenders, you could be out-of-business. So why not make your primary lenders a part of your dealership family?
Steve would invite the primary lenders to all of our dealership functions. When we had a big sale or promotion, they were invited. When we planned a dealership picnic or Christmas party, they were invited. What goes around, comes around. Treat a lender right, and you will be amazed at the cooperation you get!
When there wasn’t a function going on, Steve would periodically take the lenders to lunch. A little one-on-one rapport-building never hurt. I know for a fact that Steve even took a few fishing trips with lenders who had become friends over the years.

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