Hot enough for you? As a contrast to the surging summer heat waves sweeping the country, new car sales have experienced a modest cool off after roughly seven years of consistent growth. While some see this as bad news since consumers might not be flooding the lots like they used to, others may see it as a chance to identify possible weak spots within their programs.
Despite the fact that new car sales dipped 4.7 percent in April and 0.5 percent in May, according to Automotive News, indirect lending continues to be a highly competitive and profitable market for financial institutions of any size – perhaps even more so now that sales figures have come back to Earth after such significant gains.
Because of this increased competition, now’s the time to evaluate or re-evaluate your operations to make sure they’re positioning you for the most success. Dealer management continues to be a major focus of our industry’s most successful programs and for good reason. To help you with this process, here are three tips to consider:
- How often you should visit: Visit often to build good relationships. Dealers get visits every day from vendors, so be careful not to overwhelm them. One visit per month is usually sufficient. When you leave after a meeting, make sure you always tell them you will see them next month. Also, think about what you say. Prepare. Go into a meeting with statistics. Thank he dealer for the specific number of applications sent to you over the previous month and be sure to follow up on any specific concerns the dealer may have. This shows willingness on the lender’s part to make time to personally address any issues as well as to ensure that the dealers know how much you value their business.
- Preventing dealers from flipping your customers/members: Since most competing financial institutions will pay different reserves and allow different backend amounts, some dealerships try to sway the customer to other banks or credit unions. If this happens, immediately bring it to the attention of your main contact. If it continues to happen, don’t hesitate to discuss with the dealer’s upper management. This is something that cannot be tolerated, and it needs to be explained that it’s harmful to your overall relationship with that particular dealer. This is usually referred to as flipping your customer. Some institutions will work language into their agreements with dealers to try and prevent this sort of practice.
- Encouraging dealers to submit clean deals: Dealers want to get their money as quickly as possible so they can get deals off their desks and move on to the next ones. Some dealers might know a funding package is incomplete and send it anyway. Usually, they figure they can worry about it later or think they’ll be able to provide the missing documents before the deal gets to a processor. In this case, it’s important to educate them that it slows down the process and hurts efficiency. Explaining things in terms of how they affect the dealer’s bottom line usually is the most effective way to get your point across. It also helps to minimize the documents you require to only the essentials. If something’s consistently missing from packets and deals can still be made, you have to ask yourself if that document is really worth the hassle.
Effective and efficient dealer management is critical for financial institutions of any size to drive portfolio growth for their indirect lending programs. These are just a few helpful tips that will help develop stronger relationships with your dealer partners while at the same time making streamlining the entire process for both sides.
CRIF Select is the industry’s most trusted partner for indirect lending success. Our expert team of professionals not only has proven results with dealer management, but also provides sound strategic advice for all aspects of your indirect lending program including technology, underwriting, reporting and funding.
TDECU is a great example of how teaming with Select can take any indirect lending program to the next level of success. The credit union has seen at least 20 percent growth each year since partnering, and its dealer network expanded from 41 dealers to more than 150. To read more about how this was accomplished, please click the button below to request our case study.
Photo Credit: Gareth Simpson