Demetrios T. Lahiri, MBA Vice President of Sales

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2 Demetrios T. Lahiri, MBA Vice President of Sales

3 Three Primary Functions Three primary functions of the modern business manager 1. The Lender Function Manage lender relationships, especially with the captive lender 2. The Sales Function Maximize gross profit 3. The Management Function Manage relationships within the dealership; sales managers, sales professionals, and accounting office

4 Managing the Lender Function Daunting task for business managers Making sure that every deal that should be approved, is approved Every time a deal is placed with a lending source, it is placed with the best possible lender

5 The Lender Function This critical function determines Number of marginal deals approved Profitability of dealership Number of vehicles sold Gross profit Sale of vehicle Sale of products in the business office

6 Step One Dealer Meeting Meet with the dealer to assess his/her expectations regarding the lender function. Expectations include: Greater approval ratios Faster call back times Quicker funding times Preferred rates and terms All expectations need to be written down and clearly defined

7 Step Two Business Office Meeting Meet with F&I personnel to assess their expectations regarding the lender function. Expectations include: Better rates Faster approvals Larger advances No Line 5 Calls Large VSC limits Longer terms Fewer turned down deals Larger flat fee commissions Department must buy-in to the goal, as achieving the goal will require additional work from each team member

8 Step Three Sales Meeting Meet with the sales management/sales professionals to assess their expectations regarding the lender function. Expectations include: Larger advances More approvals More automatic approvals Longer terms Less Line 3 Calls Less turn down deals More conditional approvals Faster approvals

9 Step Four Written Synopsis Formulate a synopsis of dealership needs with regard to lender function Written synopsis of combined expectations Formulate a unified dealership position for addressing lenders

10 Step Five Identifying Lenders Identify key lender relationships Critical part - minimize number of key relationships Goal is to have three key lender relationships with each one serving a different purpose Captives Banks Sub-Prime

11 Selecting Lenders Selecting three key lenders allows the business office to understand the various programs What to spot contract vs. what to not spot contract Funding guidelines When a large percentage of the total business is sent to a smaller number of lenders, the business office becomes more valuable to the lender Is there is a Credit Union group that has a large presence in your market? It is advisable to add this group to your group of key lenders

12 Step Six Lender Meeting Set up meetings with dealership management and key executives from each lender Finance director needs to lead the meeting Ask lender what the dealership can do for them Lead the lender to ask what they can do for the dealership Use the previously prepared written synopsis as the guideline for these requests

13 Step Seven Continued Relationship Continue to grow the relationship with quarterly follow-up meetings Review good lender analysis log Be prepared to discuss why other deals where sent to competing lenders What could have been done to save the deal Build a personal relationship with the key lending personnel

14 Maximizing Lender Callback During a re-hash, it may be necessary to work towards a condition first Goal for all deals, they should be conditioned or approved Do not be afraid to go to a supervisor If you are unsuccessful with the supervisor, you can speak with the branch manager However, make sure you have merit in the deal and have done all of the research prior to the call

15 Rejected Deals Ask for GM/Dealer to review He/she will have final authority to turn down the deal Upper management may have a way to get the deal approved If you can t get it done, no one can.

16 Reminders Always be consistent, honest, and fair with lenders Never sacrifice your integrity or that of the dealership

17 Problems to Solve with the Lender Slow call back times High rates Line 3 Calls Line 5 Calls Unpredictable No way to go, not enough conditional deals Buyer is afraid to make a decision Most problems can be solved with a meeting with the lender

18 Helpful Tips Always Send all documentation and evidence to the lender with the deal Try to obtain an approval with no conditions attached Have a legitimate basis for your request for an approval Obtain a conditional approval rather than a turn down Maintain an accurate lender call log Be professional Never Mislead, argue, or become emotionally involved

19 The Marginal Credit Interview Never an interrogation, but rather a discussion of the customer s past credit history Explain to the customer in advance of the interview What areas will be covered Why it is important to the lender This reinforces that you are acting in the customer s best interest

20 The Marginal Credit Interview Must ask the following questions in the interview process Why did it happen? What has changed? Why will it not happen again?

21 Common Credit Interview Questions Did you ever have a borrowing relationship with? How would you describe that relationship? What was the reason for the problem? Do you have any documentation that supports that? Do you have any receipts or canceled checks to show that the obligation has been paid? Do you have any statements from the hospital or letters from your insurance company to document that you were unable to work? Did you ever reside at? Have you changed your name due to marriage, divorce, or other reasons? Do you have an undergraduate, graduate, or post-graduate degree?

22 Common Credit Interview Questions Have you ever had a student loan? Would you write a letter to the lender explaining your past derogatory credit, what has changed, and why the situation will not reoccur? Do you have any additional sources of income? Can you document that income? How? Do you have any stocks, bonds, annuities, CD s, trusts, dividends, other assets or cash that we have not discussed? If the lender requires more money down, how much more would you have available to invest? Are you expecting an income tax refund this year? Are you expecting any raises in the near future? Do you receive any child support, alimony or separate maintenance payments that you would want to be considered for this loan application?

23 Common Credit Interview Questions If needed, do we have your permission to consider these sources as additional income for the purpose of obtaining financing? Does your ex-spouse live in this state, and are those payments made through the court? Could you provide official receipts or documents that will verify those payments? Would you consider a less expensive automobile if the lender does not advance sufficient funds for this vehicle? What is your current balance at? Would you pay off the balance on your account and bring in a paid in full receipt that we could submit to the lender? Did you have a VSC on your trade in vehicle? Did you have credit insurance on your previous loan that we will be paying off on your trade in vehicle?

24 Working with the Buyer Verify with the buyer that all of the information from the interview is correct and true It is very important for the buyer and the business manager to be on the same page

25 Information to Verify with the Buyer Verify the collateral, cost/book, invoice, added equipment, miles Verify the credit accounts, balances, status, and score Verify the total income Verify employment history, with explanations for any gaps in employment Verify that the address is actually where the customer resides Verify that the phone number matches the residence and the customer, with documentation, i.e., phone bill

26 Information to Verify with the Buyer Verify banking information with bank statements Verify employment with POI including YTD Always have options for the lender Payment advance Percentage of advance Actual dollar limit advance

27 Closing Follow proper methods of managing the lender function of the business office Utilize a proper customer interview Utilize proper re-hashing techniques The result should be an approval or conditional approval on any deal with merit

28 Demetrios T. Lahiri,MBA Vice President of Sales