If you are looking to increase your dealership’s profits, your lender portfolio is a great place to start, and inventory and process management depend on it. However, it is easy to fall into the trap of thinking: the more banks, the better. In order to determine the right mix of banks, there are a few steps you can take. First, go through your records for the past 30-60 days and evaluate all of the deals you submitted for lender review.
Asking the right questions
1. What do the successful deals have in common?
Be sure to look at credit score, down payment, vehicle, and term.
2. Which bank has been your best buddy during that time frame?
3. Is there a credit range that seems to be a sweet spot for your active lenders?
4. What are the gaps in lending coverage for the credit scores you’re seeing from your consumers?
With this analysis, you can quickly determine the strengths and weaknesses of your current lender portfolio. Use this information to better match your options to your buyer. It is important to understand the banks’ programs and finance sources that allow a generic deal structure to be submitted for credit approval. The last thing you want is a finance source that requires all details of the purchase in advance of credit approval.
It is important to continuously ask yourself these questions and to re-evaluate if your current success rate and grosses are not up to your desired level.
The full Special Finance Best Quick Start e-book can be found here.