Five Keys to Finding Your Next Big Lender

Since the 2008 banking crisis, national lenders have changed and tightened their criteria for lending, which has left many dealers and customers in the lurch. One solution for dealing with this is to circumvent the big banks and establish relationships with local lenders.

Community banks have a different business model than national banks, which engaged in risky business practices for years. Most community banks, credit unions and local lenders invest in the community by lending to local businesses; writing mortgages on local properties; and making personal and luxury vehicle loans – usually to account holders. Historically, local lenders have had tighter lending criteria than national lenders. That statement is not necessarily true now. So many loans went bad that many national lenders are taking no risks with the new loans they are writing. However, the local lenders who have not taken the same losses may choose to take more risks.

In addition, you have a better chance to build relationships with community banks than you do with national banks, and that will help you get approvals for customers with marginal credit.

So, how do you win a bank over?

1. Find a local source. When customers come in with a check from a local bank, make a note of the bank. See if the customer can refer you to a contact person and call them after the customer leaves. When you contact a bank, make sure you talk with the person who can make the decisions.

2. Create a lender presentation. Create a professional-looking booklet to give to bank representatives when you meet with them. You need to gather some facts about your customer demographic: average age, average credit score (that you have gotten financed in the past), average income, percentage of male and female, average down payments, average loan amount – any customer statistics you can think of. Also, research and include percentage figures for your sales in street, dirt, water and snow vehicles.

Include information about the programs you offer in your finance office. If you sell more than one brand, include what percentage of your business is in each brand. Include a dealership bio and some financial information about the dealership to show financial stability. For a sample booklet, e-mail [email protected] and I’ll send you one.

3. Make an appointment and prepare. Call to make an appointment. Offer to meet for lunch or coffee. You can have them meet you at the dealership if they have never seen it, but never hold the meeting at your dealership or their office. You want to devote all your attention to them, and you want the same in return. Before the meeting, prepare a list of questions for your potential lender.

4. Have the meeting. Start off by going through your printed presentation and talking about the dealership. Be sure to answer all their questions as fully as possible. If you don’t know the answer, find out the answer and get back to him or her.

Next, you want to ask your questions. Do you know about our maintenance program (be prepared to explain the benefits when you ask this)? What products will you let us add over and above the approval? Do you typically require a down payment? If so, how much? What is the turnaround time on your approvals? Are there some dollar amounts you can approve in the branch, and higher amounts that need to go to a central branch?

What are your hours of operation? Will you let us have the loan signed at our dealership? After we contract a deal and send it to you, how long will it take to get it funded? What can we do to help the approval or funding process go more smoothly? Ask anything else you think is important.

At the meeting, it is most important to be professional. The more professional and prepared you seem, the better your chances of acquiring them as a finance source.

5. Keep in touch after the meeting. Follow up with a card thanking your contact for their time. Continue to follow up with him or her by phone until you get a definite answer. If the answer is yes, you might have found a great source that will help sell a few more vehicles. Even if the answer is no, continue to follow up quarterly just to check in. Lending guidelines and personnel can change, and if they decide to start making loans on recreational vehicles, you want to be the dealership they think of first.

This takes work. You will only get an appointment with one out of five or 10 of the banks and finance companies that you approach, and fewer than half of those will be willing to finance vehicles for you. I worked as a finance manager for 10 years. When I started devoting between one and two hours a week to finding new banks, I was amazed at the results. I followed this format, and my success was huge.

You will never be a bigger hero to your sales staff, sales manager and general manager than when you find that new finance source that allows you to sell more bikes and helps you make more profit. Take the time to be that hero, and find more local banks.

Steve Dodds II is a moderator, trainer and consultant for Gart Sutton and Associates with experience in all sales and finance positions. If you have questions about what he can do to help you meet and exceed your goals, contact him at [email protected]

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