Issue link: http://read.dmtmag.com/i/679587
FINANCIAL 8 • May 23, 2016 • Powersports Business www.PowersportsBusiness.com F&I SOLUTIONS The American Motor- cyclist Association (AMA) had a rule that stated that any rider could purchase the motorcycle of another rider for a stated amount of money. In 1976 this amount was $2,500 for a 125. The first successful claim didn't happen until 1979, when a guy by the name of John Roeder was able to claim Marty Tripes' factory Honda MX bike. It had turned out that Roeder had tried a few other times to claim a factory bike, but since the rules weren't perfectly fol- lowed, it didn't work out. After a few years of studying the rules and a few rule changes, Roeder was able to get a claim to stick, and he became the owner of a factory Honda MX bike on March 25, 1979. This matters to an F&I manager because it's an example of rules being followed in order to benefit from them. Much of winning is about knowing the rules better than the competition does. I've witnessed this since I got in the business 25 years ago. The people who taught me are still at the top of the industry because they still pay attention to rule changes and know them like the back of their hands. Most of the best-performing F&I manag- ers in this business are doing a very good job of using the rules to their advantage, and it's some of those rules that I want to share with you. You will find that some of these techniques being used right now aren't even rules, but they're only considered "doing your job." Our top-performers always run a credit bureau — or two. Notice I said two bureaus. The credit bureau companies seldom agree on their scores, and quite often they can vary by 40 points or more. That could mean the differ- ence between an approval, or one of those red Xs signaling a DECLINE. Now, if you run the first bureau and it's a good score, putting the customer in the prime category, then there would be no reason to run a second. But what if you run the first bureau, and it gives a 629 beacon? What if your lender won't approve anything under a 650? Run the second bureau, and it just may bump your customer up above a 650. I watch it happen on a weekly basis. But wait! Some people are saying that lend- ers only accept specific bureau scores. That could be a sign that you don't have enough of the right lenders. Yes, there are banks out there that will honor a different bureau score … but you've got to know the rules. They're not always written, but at times, it's just talking to your lenders about how they interpret their rules. I'm not saying drop any of your lenders that won't look at a second bureau score if it's higher than the one they pull, but I'm saying that you need to find out if you have a lender that will do this, because some will, but they don't advertise it. Just last month I got to watch an "above average" F&I manager get cutoff from a prime lender due to sending too many subprime deals with no structure to them. This person was "shotgunning" deals to most of his lend- ers. His last mistake was taking a customer with a 580 beacon and past due child support and sending this person to a lender that only looks at 640 and higher scores. Needless to say, he got dropped. There are a couple of reasons why you don't "shotgun" deals to your lenders, but the most common argument that I hear is only a myth. First I'll define "shotgunning." When a motorcycle dealership shotguns a loan appli- cation, they send it to many different lenders with which the dealership has relationships. The process usually only takes a few minutes and enables lenders to compete for the loan and for the dealership to help their customer find the best loan terms. The myth is that hurts the buyer's credit score. Because credit scoring systems count multiple loan inquiries as a single inquiry, shotgunning does not affect a person's ability to qualify for credit. The credit scoring systems allow people to shop for the best rates on loans without having a negative impact on their credit scores. They do so by counting all inqui- ries for motorcycle loans within a given period of time as a single inquiry. That time period may vary slightly from one credit scoring system to another, but typi- cally it is 14 days. Top-performing business managers have to be compliant, follow the rules and be creative at the same time. They find ways to innovate and do things that their competitors aren't. They know the rules of the business. They find strategies that nobody else does, and they use them to win. Every manager has access to mas- sive amounts of resources. Are you accessing those resources? PSB Tommy Ady is an F&I sales expert with more than 25 years in the powersports retail business. He is a trainer and consultant for Gart Sutton & Associates. Contact him at tommy@tommyady.com. Are you accessing all of your F&I resources? TOMMY ADY