F&I personnel reach out to local lenders

By Karin Gelschus
Associate Editor
Due to tighter credit restrictions, powersports dealers are finding creative ways to ensure that even customers with less than ideal credit scores can still head home with a new motorcycle or ATV.
In an effort to complete the more thorny transactions, some F&I personnel are reaching out to additional lending sources, many local. Dealerships are becoming more aggressive in obtaining local lenders by making extra phone calls and initiating meetings.

Obtaining lending sources
Credit application denials hit their peak last April and May for Freedom Powersports in Cape Coral, Fla., but approvals have slowly started to increase in the past couple weeks. Richard Westran, dealership F&I manager, says application approvals had dropped considerably in the spring when many financial institutions were especially wary of anyone with less-than-perfect credit.
“Around April and May we were really struggling to get people financed,” he said. “People’s credit histories were affected by foreclosures or late payments. It was tough. There was a massive drop.”
At that time, extra effort was needed to approve his customers, so Westran says they searched for companies that would accept lower credit rates. The dealership currently has six lending sources.
“We’ve had to vary it more,” he noted. “We’ve had to find other sources where we can get lower credit scores approved or for different financing types. Different lenders are better for different credit types and loan amounts.”
Freedom Powersports isn’t the only one expanding its lending sources. Geison Motorsports in Rock Falls, Ill., has 16 lending sources. Trista Shelley, a F&I employee at the dealership, says Geison Motorsports has been acquiring more lenders as customers are becoming increasingly difficult to finance.
“For our more difficult to finance customers,” she said, “we have some secondary and third lending companies that will take another look at them, where as local banks would not. We find them or they find us, whatever is available.”
Taking more initiative, Greg Mackey, president of Cycle Central, which has eight locations in Florida and Georgia, says his dealerships have been more adamant about getting local lending sources and credit unions.
“We had, quite frankly, gotten lazy in years past and had not been as aggressive as we should have with local (banking institutions),” he said. “We’ve gone out now and started reconnecting with the local lenders.”

Making the connection
As Mackey can attest to, finding new financial institutions to partner with isn’t an overnight process. He says Cycle Central had numerous lunches with different sources discussing any potential opportunities. He added “(we did it by) putting our face back in front of them and letting them know we want to send them some business.”
Irv Fosaaen is the owner of multiple dealerships, and he says he uses that as a persuasion tool to get more sources.
“Some (of our) F&I managers have been really aggressive with credit unions and banks,” he said. “Of course, we have the advantage of going to them and saying ‘If you do business with us, we have offices in three states and we can provide you with a wide variety of customers.’”
They have added two or three really good lending sources, says Fosaaen. They did so by accumulating a list of credit unions and had their F&I managers contact them.
“If you can get a hold of the right person and you’re persuasive and you tell them what you have, amazingly right now there is still a fair amount of lenders that are looking for some indirect paper,” he said. “I’m not going to tell you that they buy as deep as they used to. Some of the people get turned down by are national sources, like Honda Finance, Polaris and Yamaha. (These deals) can get bought by local credit unions because they’ll look a little deeper at these people.”

On an upswing?
Westran of Freedom Powersports says approval ratings have slowly been getting better.
“In the past couple of weeks, we had 100 percent credit approval,” he said. “It’s been a good month so far. It’s slowly starting to get back to the way it was. We’re finding fewer people who have previous standings on their credit history.”
Of the six financing sources Freedom Powersports utilizes, Westran notes there are a couple that are getting less and less business. He adds he would prefer to use fewer lenders if possible.
“It’s tough when you have to go to another company (other than the dealership’s main sources) when you know long-term it isn’t going to be as cheap as someone else, but it’s the only way to get (the customer) approved,” Westran said. “Hopefully, when everything starts picking up, we could drop some of them and go with who we know we can get everyone approved with.”