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So you’re working with a customer, they have decided on the perfect boat or RV and they are ready to buy, you submit to the banks and boom: decline, decline, decline. Dead deal and everyone goes home unhappy. To make matters worse, you find out three weeks later that this same customer was approved at another dealership!
So what happened? Let’s talk about everything you can do to get more deals bought and more customers out on the water or open road. In particular, let’s cover subprime or what many call speciality financing. We want to make sure you never have to ask yourself, “why couldn’t you get that deal done!”
Thomas Jefferson said “I find the harder I work, the more luck I seem to have” and recreational lending is no exception. You make your own luck by working with your customer and with the loan officers to make sure you leave no stone unturned. Imagine for a second that you are in a hurry and you are about to leave your house. What is the last thing you do right before walking out the door? If you are like most people (including this author), you pat yourself down and you say Phone, Keys, and Wallet. Or in some cases a variation involving a purse I am sure.
When you receive a decline from a bank you need to have a system for working and handling the deal that is so ingrained in your head that it feels like a natural habit. Undoubtedly, there are going to be days that you have way too many deals in your queue and you are going to let one slip because you just don’t have the time and you aren’t being relentless with your quest to find an approval.
So what is the phone, keys, and wallet equivalent in financing? The three things you always have to remember to check after receiving declines are Customer, Credit, and Banks. In another blog, we go over all of the different things you should check before submitting. Hopefully, a majority of the things we are about to cover you have already done.
First, double check that you have everything right on the credit report. Make sure that the bureau is pulling the correct customer information. Sometimes one digit off on a social can pull the wrong file and you don’t have accurate information. After checking to make sure you have all of the customer info correct, look over the credit report and credit application. Hopefully, by this point in the deal you already have reviewed the customer’s credit report but check one more time before giving up. Look for tradelines, derogatory tradelines and slow pays that seem out of the ordinary. If the customer has all ontime payments and a couple slow pays close together, take a few notes and ask the customer what happened. What you are trying to do with this exercise is create a list of everything you see on the credit report and credit application that might be hindering the deal. You will use this information in the next step, with the Customer.
Next in the process, is speaking with the customer. Hopefully, with the previous exercise you have a few things to talk to the customer about and obtain clarification. If the deal had DTI issues be sure to ask the customer if they have more income, other income to claim or a co-applicant to add to the submission. In many instances, we will even ask the customer to send over his or her proof of income so that we can have a look. We have had situations where a customer actually made a lot more than they thought and by sending the proof of income to the bank we were able to get the deal approved.
If they have high credit card balances or accounts that look like they could have been paid off recently go ahead and ask the customer if they have paid anything down in the past 3 weeks. The bureaus can take as long as 45 days to update reports. If a customer paid a tradeline down in the past few weeks it might not be up to date on the report. Remember, any of the conversations with the customer help build rapport and show them that you are on their side and truly care whether or not they get approved. Don’t allow yourself to come across as the person saying “No.” Even if the customer ultimately gets a decline they will remember that you went above and beyond for them. When they fix their credit issues down the road they will come back and purchase from you.
Finally, putting the first and second steps together, the third step is presenting everything you learned to the bank. Sometimes you just have to say, “Get the loan officer involved!” Figure out what exactly is killing the deal. Don’t forget, loan officers are human, they can make mistakes, change their minds, and even make exceptions.
The point here is to do your due diligence. It is your job as a business manager to find the sweet spots in each of the bank programs and then don’t be afraid to involve a loan officer to help bend the programs around your deal. Explain any of the information that you learned from your conversations with the customer that might help persuade the loan officer to make an exception. Examples of this would be showing that the customer has been in the same industry for a long time if job time is short, explaining why a customer might have recently moved if time at residence is low, or anything else to paint a better picture. Think of yourself as a defense attorney representing your customer in front of a jury. Don’t forget, it is not your job to say no… it’s your job to get the loan officer to say yes.
You put all of these things together and you should see your submitted to approval ratios improve greatly. Contact us if you would like to discuss this further. One of our Recreational Finance Experts can go over your dealerships weak points and help to make sure your finance department is running at 100%. We provide free one on one finance consultations that deep dive into your F&I numbers and compare them to the most profitable dealerships around the country to see where you stack up.