Without referencing a tired and old-fashioned saying about ways to skin a cat, I’ll just start by saying that there isn’t simply one specific road to indirect lending success. While all programs strive to provide the best rates, win more business from their dealers and offer the speediest turnaround times, there are a number of good ways to achieve those goals.
The most profitable programs are constantly evaluating their policies and procedures – looking for ways to outpace the competition or tighten their own operations. Here are three more interesting best practices to consider when evaluating your indirect lending program:
Do you compete beyond rates?
Lower rates prevail most of the time, but that’s not always the case. This is where great dealer management can make all of the difference. Finance specials can be very effective, and will help you draw added attention for the dealers. This could be as simple as piggy-backing major holidays with things such as extended terms without a rate bump, or 90-120 days before the first payment.
How diversified is your portfolio?
Let’s face it — no one turns down A-paper unless something else is seriously wrong. So the best way to maintain portfolio growth is to diversify as much as possible. This can be done by cherry picking deals with C-, D- and E-level paper. These are the people with the greatest need and fewest options, so it’s also a way to build loyalty – just be sure to take the right precautions to mitigate the risks associated with the loan.
How strong are your loan origination system’s communication tools?
Your indirect lending technology must provide the ability for two types of dealer notification to be sent. The first includes individual application decision notifications via fax or email. The second kind is summary notifications which provide daily activity for funded loans. Also, your technology should be able to support dealer notes through interfaces such as Dealertrack and RouteOne, which allow for bi-directional communication on pending deals. And don’t forget, the ability to upload documents is also very important for your communication feature.
Indirect lending success in today’s hyper-competitive market requires an intense attention to detail to make sure all aspects of your program are firing on all cylinders. These areas include technology, reporting and consulting, processing and funding, underwriting, and dealer management.
Dealer management can sometimes be one of the trickiest aspects to master since so many dealers are looking for loyalty and strong relationships with their lenders. Once those relationships are established and strengthened over years of working together, they can serve as the backbone of your program’s success. However, maintaining dealer relationships requires almost as much work as establishing them when you consider how many other lenders are knocking on their doors for a share of their business.
That’s why seeing things through the eyes of a dealer rep is so important. CRIF Select will host a complimentary webinar at 2 p.m. ET on Wednesday, May 23 featuring a panel discuss of four dealer reps from across the country. They will weigh in on what matters most to them in certain key areas of a lending relationship and how financial institutions can better build profitable relationships with their dealers.
To register for this webinar, please click the button below.
Photo Credit: Official U.S. Navy Page