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Have you recently conducted an internal review of your dealership’s deal submission process? When was it first implemented and has it been updated since? What ideas or old processes are holding you back from achieving your goals? Let’s discuss what your process should look like and see if you have the right internal checklist to make sure you aren’t losing deals and not even knowing it!
Deal submissions can make or break literally everything about your deal! And it can be broken down into 4 categories:
So let’s start with bank guidelines. Which bank should you place your particular customer with? Some people say to shotgun it out to all of the banks and let’s see what happens. If you are one of those people then you may have experienced a lot of deals unexpectedly get declined because banks started automatically declining deals that were not structured perfectly! If you do not know exactly what your banks are looking for at the right time of year you will get declines left and right.
So what sort of guidelines am I talking about? Down payment requirements, max term, max LTV, year model, type of collateral, discounts on invoice, new-non current models, Co-Applicants at separate addresses, this list is just the beginning. My point here is to know your bank programs!
Let’s talk about the “customer.” What are you analyzing about the customer’s information?
Are you taking the time to verify customer addresses with their driver’s license and credit application? Very often you might get to the end of a deal and the customer wants to change the address and the bank requires proof of residence to do this. It might not seem like a big deal now but any extra stipulation can cause you to lose a deal. Furthermore, if you aren’t paying close attention to address verification you are violating a lot of compliance requirements anyways. Why not just make sure you submit it with the correct address from the beginning?
Other things to watch out for about the customer are their debt to income and mistakes with the credit application. Even small minor mistakes on SSN, time spent at their current job, or salary can delay a deal or even kill it in some circumstances. Don’t forget to ask the customer if they have other income. If you submit everything correctly the first time, you don’t have to worry about handling a proof of income statement or other stipulations after the fact.
My guess is that you’re spending more time on this category than any of the other ones right now. That’s great if you are. Obviously, one of the hurdles that everyone knows is credit score. But also, you need to look at the length of time in the bureau, high credit amount, number of tradelines, any collections, bankruptcies, settled accounts, or other delinquencies. We check one item after another and make sure we have the full picture before submitting to the banks. This increases our submitted to approval ratios greatly.
Last but certainly not least, is collateral. What unit is the customer purchasing and is there a trade? If there is a trade, is there a payoff? Does the trade cover 10% down? Is there negative equity in the deal that we need to look out for? Make sure you know if the boat is new but non-current. Know which banks consider it “used” and which consider it “new” from a valuation standpoint. Double check that you have the right NADA or BUC values when working with your used collateral. When working with any new collateral, check to see if you have any discounts on invoice to add back to the value amount to help with advance and loan to value.
Hopefully reading this got you thinking about the submission process. All too often, we focus on the end finance presentation and we forget how important the upfront steps are. A lot of dealerships think they have this piece of the puzzle figured out, and they don’t know that they are making mistakes until they see deals getting bought at other dealerships that they could not get done at theirs.
Maintaining and updating the submission process can be difficult for boat and RV finance managers to keep up with. That’s why it’s important to always make the time to update and optimize your submission process – especially when things slow down a little at your dealership. It might just be the reason that you close more deals and see your profits take off. Feel free to download our “Deal Killer Checklist.” It covers some of the most common mistakes made when submitting deals to banks.