Everyone has a story for why they have bad credit. To maximize the benefits of that story to get financing and to help remove liability from the dealership in the event of a repossession, an F&I expert says to get that reason in writing — specifically, the customer's handwriting.
A handwritten note creates a paper trail that leads to the customer, not the dealership, while helping the customer attain financing, says David Lewis, an independent dealership trainer based in Pittsburgh.
For the customer who has been laid off from work and missed a few car payments or the recent graduate with credit card debt, a credible back story could be the difference between a lender buying a deal and a dealership losing a sale.
"The lender wants to buy the deal; he needs something to sink his or her teeth into," Lewis said. "And if I can get another two or three deals a month bought, I want those two or three deals."
If a customer was untruthful in his or her story and defaults on the loan, the dealership is protected in the event the bank does an audit on the deal.
"Now if the car repossesses, they're not going to come after me. I didn't tell the story; you told the story. You put it in writing, and you signed it. That's bank fraud."
Tony Dupaquier, director of standalone F&I training company The Academy, has been teaching his F&I managers to get the story in writing for years. But the letter alone doesn't shield the dealership from liability, he said. Any fraudulent information in the customer's story would be discovered by the finance company before the funding is sent to the customer, and the lender would investigate whether the dealership was at fault.
A lender wouldn't buy a deal based on a note alone. Still, having a note to distinguish one customer from the next is helpful when communicating with the bank about multiple finance deals.
When it comes to customers with marginal credit, F&I managers should ask for a note. So long as an F&I manager doesn't promise the customer that the note will guarantee approval, it certainly couldn't hurt.