By Michelle A. Samaad
With 15 years of dealership experience, Sarah Richard Denton has seen her fair share of what works and what doesn’t when it comes to working with credit unions and other lenders.
Denton is a finance and insurance manager at Kelly Cadillac in Lancaster, Pa. CU Times recently tuned into a webinar where she shared her personal experiences with lenders.
When it comes to working with credit unions as compared to banks, she had a few poignant observations. For instance, credit unions are more lenient on certain types of credit, Denton noted. A 20-year member who has worked at Alcoa, for example, may have a horrible credit history but a credit union will likely work something out, Denton said.
“There are some weird quirks about working with credit unions. They’ve really become more prevalent in indirect lending,” Denton said. “As far as funding, some do it good and some do it bad. Everyone is different. As a dealer, one of my biggest fears is losing business from a credit union.”
However, as a long-time member of a credit union, Denton said she has an affinity for them.
“I love my credit unions. I have a very a good friend who is a lender at a credit union that I’ve belonged to for 20 years. They do indirect and I send them a lot of car loans,” she shared. “I’ve talked to him about this before: you have to strike a balance, have a conversation. There is room for balance and it all comes back to having that personal relationship.”
So, what are some other ways credit unions can secure long-term relationships with auto dealerships? Click through to read Denton's suggestions.
1. Come on by.
“One thing that has made a difference to me and my colleagues is a personal visit,” Denton said. “Yes, the dealer is important but it’s the finance manager who’s going to make the decisions in the heat of the moment. You’ve got to develop that relationship. It may sound ridiculous but let’s go out for coffee.”
Denton said lenders who have a 60- or 90-second elevator speech ready, can go far. Once the alliance is established, her top three criteria for lenders who were able to cement successful partnerships are response time, rates and funding. Being straightforward and ethical also helps to establish trust, she noted. Staying in contact matters as well – Denton’s lenders meet with her at least once a month.
2. Be available after hours.
Denton suggested having someone around at the lending institution in the evening hours in case there are questions. Email and text messages are also critical forms of contact.
“I can’t tell you how many hairs I’ve pulled out over the years at not having someone to talk to after hours,” Denton said.
3. Secure the funding as quickly as possible.
Lenders should also avoid dragging out the funding process, Denton advised. For instance, in the subprime market, funding can get held up for weeks, she’s noticed. To speed things up, Denton suggested having as much done upfront at the time of approval.
4. Help educate dealers about new regulations.
With the myriad of regulatory and compliance changes within the auto lending sector, Denton said she understands the pressure that some lenders may face to ensure that their portfolios meets Consumer Fair Lending criteria.
Lenders who go that extra mile to educate dealers about updates through on-site workshops are always appreciated.
“Smaller lenders are saying, ‘whew,’ but I don’t think anyone is immune. Everybody is still trying to figure out what’s going on,” Denton said. “But some of the smaller lenders are more agile with getting documents in place. I think because they’re smaller, they feel they’re a little bit more exposed."
5. Ease up on the legal mumbo jumbo.
It would be helpful for lenders to have easy-to-understand contracts and letters of assignment, Denton said.
“I know there’s different verbiage in these contracts and everyone wants to protect themselves legally. It’s just very frustrating to contact someone and find out the next day, you can’t use the contacts. Call us up in the morning and say ‘did you need anything from last night?’”
6. Keep the dealer out of internal back and forth.
One surefire way a lender can lose Denton’s business is getting caught in the middle of a financing spider web, she said.
“Sometimes, lenders will say ‘we have this business for you,’ and then I’ll call them up and they’ll say ‘I can’t help you…this came down from the top.’ That can be a death knell of the relationship.”
7. Define and have a thorough understanding of your niche markets.
Denton advised lenders to get creative with their programs and expand existing ones. There’s room for fresh approaches such as guaranteed buyback programs, she offered. Pinpoint which markets to serve – franchise or independent and subprime or prime – and if they’re already serving these groups, be sure to understand all of the ramifications. She pointed out the subprime market continues to grow.
“One of the shortfalls in financing is working with the self-employed and small businesses. As a small business owner myself, I had to pay a ridiculously high interest rate. Decide if you want this type of business in your portfolio.”
8. Don’t forget the occasional appreciation gift but forget about bribes or cash.
“We do like treats,” Denton admitted. “I started in this business when gifts and crazy stuff were popular. People had a lot of money in the 1990s. Now, cash gifts are a dangerous thing. There are some dishonest people out there.”
To this day, lenders who make initial contact with a line card attached to a branded coffee mug, screen cleaner, breath mints or hand sanitizer, for example, puts that financial institution top of mind for Denton.
“It sits on my desk, I see it every day, I may call you,” she said.
Resource:
8 Ways to Strengthen Auto Dealer Relationships
8 Ways to Strengthen Auto Dealer Relationships
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