Retailers offered lenders some relationship advice during a panel discussion here last week at the 2013 Auto Finance Summit, hosted by Royal Media Group.
1. Line up your strengths with the dealership's strengths
"Come to the table with something that makes sense. You can't come in and say, 'I only want 660 and above [credit scores] and walk in and expect to do a lot of volume with me," said Dave Baudoin, general manager for Reliable Auto Sales, a used-car store in Las Vegas.
"Why should I take business from lenders I've been doing business with for years to give you one or two deals? If you've got a special finance program that goes deep -- you've got to give a dealer a reason to talk to you. If it's just going to be a fluff-and-buff session, I talk to 100-plus lenders and they all say same thing; they tell me how great they are."
2. Be flexible; don't expect a lot of business right away
"Whenever lenders go into a dealership, hopefully, they are not going to expect to turn it on and start getting a contract volume right away," said Sarah Denton, F&I manager at Kelly Cadillac in Lancaster, Pa.
"The expectation is they and we try a couple first. Tell me you can buy a 560 credit score when it's really a good person that has had some dings to his credit. Tell me: 'I'm not going to get nasty when you don't send me a 700 [FICO score] right away.' I want to be able to pick up a phone and make something happen. I don't want a no."
3. Make sure your dealer agreement stands up to scrutiny
"Usually, when a new lender comes to us, they've already been with one of our dealerships and they say, 'Hey, we'd like to do business.' Naturally, we look to make sure they're financially backed and so forth, but in addition to that, we take a good look at the dealer agreement," said Tyler Corder, CEO of the Findlay Automotive Group in Henderson, Nev.
"All sorts of lenders fled and left in the recession, and lots of lenders are coming back to do business with us. We're finding with a lot of them, the lender wants the dealer to grant recourse to the dealer [meaning the dealership could have to repurchase the contract] for up to six months in the event of default. That wouldn't be acceptable to us. ... We'll really go through the dealer agreement with a fine-tooth comb."
"Assuming that all passes, if we're going to do business, usually there's a trial period with one of our dealerships. Six months later we might want to expand. But if six months later there has only been a few deals, there's no sense expanding with something that's not for us."