Building Positive Lender Relations

A Finance Manager cannot operate alone.  A large part of your success as a Finance Manager is determined by how well you develop professional relationships.  This series of positive relationships extends beyond the dealership and its customers; in finance, in particular, success is dependent on many different service providers, all of whom must complete their tasks in a timely, professional manner in order for you to accomplish your goal – final approval and funding. No matter how hard you work or how proficient you become, you won’t be successful unless you have a strong connection with these lenders.   This positive relationship is defined by two major factors: the quality of the relationship you create with your lender and how professionally you present your deals.  

DEVELOPING RAPPORT, ESTABLISHING TRUST

Customers want to do business with people they know, people they like and people they trust. In fact, everyone prefers to do business with people they feel comfortable with; this holds true for lenders as well.  Unfortunately, many Finance Managers set themselves up for failure by forgetting that, while they may be sending a deal to a large financial institution, they are working with individuals at that institution. 

Research your lenders before your first meeting.   This allows you feel comfortable, which in turn, will make the meeting more enjoyable for the lender. It also gives you a chance to learn the common practices and strategies that guide the lender’s decisions, which will help determine which deals would be most appropriate for that lender.
Present yourself in a professional and likeable manner at all times, and use that friendly relationship to pave the way to trust. Once you have earned a lender’s trust, don’t betray it.

It isn’t always easy, but you will assure yourself greater success if you honor three simple principles in every business relationship:

Build Rapport

Get to know your lenders, visit the underwriting and funding facilities. Talk to funders and determine what works for proof of income, how many references they need, whether they accept soft ads on their booksheets, etc.

Ask what the most common dealer mistakes are. It is less costly to learn from the mistakes of others than to make those mistakes yourself. Ask what their specific requirements are for approvals. The more you know, the better you can prepare yourself to meet those requirements.

Take the time to build a friendly relationship with each of your underwriters. Remember, people are more comfortable doing business with people they like. Tell them how you’ll work in the best interest of everybody involved in the deal – customer, dealer and the lender. Let them know that you will work extra hard with them to get those marginal deals bought.

Take everyone you speak with seriously. If they feel they are important to you, they will make you important to them.

Show Respect

Many Finance Managers sabotage themselves by treating their lenders as unimportant and secondary to the overall process.  Others may just as foolishly view them as faceless non-entities who aren’t interested in anything but their paycheck. The truth is, unless you have the help of these essential people you cannot accomplish your goals.   Furthermore, their attitude towards you significantly affects their attitude toward your loan packages. By treating these providers in a respectful, friendly and considerate manner, you will begin to cultivate a positive relationship and build rapport.  It may sound rudimentary, but treat others the way you would want to be treated, regardless of the situation. These underwriters and funders will work on your future deals . . . and they have long memories. One negative experience with a dealer can outweigh ten positive experiences.

Establish rapport based on mutual respect and you will create increased confidence. Once lenders feel secure doing business with you, they are more apt to work harder for your deals and are more willing to go outside their guidelines to get these deals. There may be a time that an underwriter may buy a deal because of their opinion of you, not the customer.

Establish Trust

In our business, trust is earned, not given. It is up to you to put forth the extra effort to build a foundation of trust. If you tell a lender a particular contract is his, give it to him. If you say a missing stip is being sent, send it. Be consistent!

Follow through on all of your promises, no matter how trivial a particular issue may seem to you.  What seems like a minor detail to you can cause immense frustration to your service provider.

If you know that fraud is being committed, don’t sell that person a car. Make this deal another dealer’s problem. Don’t ruin your reputation, and the trust you worked so hard to create with your lenders, by sending them a fraudulent deal. 

By honoring these three principles every time you interact with your lenders, you will find them working harder for you. You will find it easier to get a tough deal bought. And you will find rehashes turning out in your favor.

GETTING DEALS APPROVED

Having established a positive, professional relationship with your lenders, you now have to make sure your deals are being packaged professionally.  After all, your lenders may want to help you get your deals approved, but they have to have something viable to work with.

The following practices should be integrated into your submission process:

Compile a Complete Package

A loan application that contains information that is inaccurate or is missing will delay the approval process, or even sabotage it. Verify with the customer that all the information (including employment, residence and credit history) is accurate before sending it on to the lender. If stipulations are required, include them in the initial package.  Inaccurate information can mean that a loan gets rejected when it otherwise would be approved.  This not only strains the relationship between the lender and the Finance Manager, it can also discourage the customer.  

Watch for Approval Patterns

Keep track of lender approvals and rejections. This should provide a clear-cut idea of exactly what the lender is looking for in a loan qualification. When submitting a deal that seems marginal, take the time to let the lender know the reasons for any credit problems. Providing the reasons, and subsequent solutions, to these credit issues can mean the difference between approval and denial.  It also shows the lender that this deal is important to you. 

Establish a Lender Portfolio

As the saying goes: don’t put all your eggs in one basket. Utilize a variety of lenders, but don’t go overboard, either. Establish a small stable of lenders, and keep track of your repossession rate with them. Obviously, the smaller that rate, the more pull you will have with that lender.   You also want to be sure that you’re sending a sufficient number of deals to each lender.  Otherwise, a lender may feel neglected, or even insulted; when you finally do send a deal to that lender, that negative impression will place it in jeopardy. Ideally, you want to have a small number of lenders whose guidelines cover a wide range of deals.  This way, you can invest the time in establishing and maintaining positive relationships with your service providers, while ensuring that each lender receives a sufficient number of deals. 

In the end, the successful Finance Manager is able to develop and maintain positive relationships with a balanced portfolio of lenders, while consistently submitting complete and accurate loan packages.  While this practice of courteous professionalism makes it possible for you to achieve your goals (i.e., more approvals), its implementation impacts the entire dealership.  The dealership’s cash flow, and indeed, the entire operation, is dependent upon the lender approving the loans and funding the deals.