Remember 2009? There were tight pocketbooks and even tighter lending guidelines. Strong and efficient lender relationships were a requirement for success in the subprime market.
Much has changed since those dark days. But as much as things change, many of the key components of successful lender relationships that applied in 2009 are still very much valid for subprime success today. Among them:
- Send applications only to lenders who have a chance of approving them. Some dealers think they’ll have a better chance of getting a subprime customer approved by taking the shotgun approach. They send an app out to as many lenders as possible, hoping that at least one will buy the deal. But the truth is that you will have more success if you are able to strategically match customers with specific lenders. Try to get it down to the lenders that will be truly interested.
- Keep on top of your book-to-look ratio. If you send a ton of apps that don’t turn into deals to a particular lender, it’s safe to say that they may start to think twice about doing business with you, and may even shut you down. It’s good practice to give your best lenders a fair shot at the workable deals. Be a student of what lenders like and what they don’t like. Ask your lender rep; they will be happy to share that information.
- Follow the lender’s check-sheet. Every lender has a unique check-sheet that is ordered in a specific way. They’re used when reviewing applicant documents to verify that the paperwork is complete. Following each lender’s check-sheet will enable you to present documents in the lender’s preferred order so that they will be easier to review. The cleaner the lending package the faster you will get funded. Make the lender’s job easy to fund your deals.
- Proactively track the funding. When you are waiting for a deal to be funded, you can’t just ship it and forget it. Be proactive in following up on funding status, this will unearth issues quickly and improve the speed your deals get funded.. Proactive dealers get deals funded more quickly.
- Be ready to rehash a deal. If you feel that an app has been unfairly denied or if your customer needs better terms, you should call up the lender and be able to intelligently rehash the deal. You’ve spoken with the customer face to face, and you know details that may not be on the loan application. Make sure you are able to simply and clearly articulate the consumer’s situation and why the lender should consider different terms or conditions. And if you have a good relationship with the lender’s underwriter, you will probably have a better shot at pleading your case.
The rules of lending have changed since 2009, but the rules of successful relationships have not. How are you doing on your end? Remember, relationships are a two way street.
You can make sure that you’re working with the best lenders by finding out which ones have the highest rankings in your area. The team at CarsDirect and Auto Credit Express can get you the most up-to-date rankings for both local and national lenders. Feel free to reach out to us at 888-535-CARS (2277) for a personalized market-analysis report for your dealership.