Oct. 13, 2008 – A step that may improve finance rates

LAS VEGAS — A practice for F&I personnel to consider could help dealerships improve finance penetration, a huge issue in the wake of tightening credit standards.
Peter Jones, a consultant who has worked with several dealership groups on F&I issues, advised dealers at the 2009 American Suzuki Motor Corp. national dealer meeting to add a customer interview to the store’s F&I sales process. The interview, which would occur after a credit application has been filed, would be geared at two objectives: to find if there are any reasons for possible credit report hiccups and to see if there are any preconceived objections to F&I products.
Discovering the potential credit report hiccups could prove hugely important to getting a consumer financed, Jones says. If there is a valid reason for a consumer’s credit report rating to have slipped — a layoff or family emergency — then F&I personnel should contact the lender, alert them of this situation and ask them to reconsider if an initial loan request has been declined.
“Now will they turn it around? I can’t say that,” said Jones, who has previously worked for lending institutions. “But I can tell you that they’ll listen, and they only make money by lending it. Even in a tight credit market, they still have to lend money.”
Jones notes F&I personnel should only call lenders on borderline cases where the credit score is near acceptable standards.
“A dealer should take up the battle on deals that are justified and have a shot,” he said, noting however that if they try this on deals that don’t make sense because of low credit scores then lenders will be less inclined to deal with that particular dealership.
How often will a lender reconsider a loan because of these unique consumer situations?
“It depends on the situation,” Jones said. “If it was, ‘I got into a DUI and broke my leg and I was out work,’” then that consumer probably won’t get financed.
Jones also noted that dealership personnel should be careful in how they conduct the F&I interview as dealerships are not considered credit-reporting agencies. Dealer personnel obviously can pull credit reports but regulations can be “tricky” about what dealer personnel can speak to the consumer about from the credit report, Jones says. He advised dealership personnel to ask about what conditions might have led to a less-than-desired credit report but stay away from citing specific late payments.
An acceptable question dealership personnel could put forward would be, “Looks like three months ago you were late on a few things, what happened?”
This F&I interview also could serve as a way for dealership personnel to question the consumer about their past history with warranty and other F&I products to understand the consumer’s mindset before actually presenting the store’s back-end products.
“Any time you get into a sales situation, if you can know in advance of what the objections are going to be, that’s worth its weight in gold,” he said. PSB

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