The future of automobile financing is the Internet! It may not be the way you think. It's not going to be one customer at a time going to a web site. It will be finance managers using the Internet to obtain financing for their customers.
In 2000, I wrote in my book — “The Vision of Finance and Insurance, a training narrative” — that the future of automobile financing is the dealership finance office surfing the web for the best financing program for customers. This year has already proved this to be true, with more and more lenders offering a web site for the finance office to obtain approvals.
Many experts now see the real future of the Internet to be business-to-business (B-to-B). The phenomenon called the Internet is for real. It will make business more efficient and become a profit source for those that embrace it. It now seems evident that the approach to the Internet was just off the mark. It is more efficient for an experienced F&I specialist to surf for the best deal for a customer, rather than for each individual customer to do it for themselves. Most customers don't feel comfortable getting financing from an unknown source. They feel more at ease doing it through an expert at the dealership.
Credit scoring has paved the way for this method of financing. It is easy for a finance manager to compare multiple sources across the country when the computer program makes the decision.
Look for banks that allow Internet financing to combine the credit score with a demographic score, i.e. the customers job time, residence time, debt to income, or other characteristics of a loan decision. This will greatly enhance the bank's approval process and allow decisions to be made in seconds. Since the lender will save money with this form of financing, the dealership will benefit with the best rates possible.
Lenders and dealers who embrace this form of financing will outdistance the competition!
There has never been a better time to be in the F&I business. I see dealers controlling 80-90% of future auto financing. The Internet will greatly enhance our edge. That's just the start. There is no better place for a customer to get their lease or loan than at the dealership's F&I office.
Why should a customer choose the dealership's finance department to arrange a loan or lease?
Where is the most convenient place to arrange financing?
Where is the only place you can shop for the best financing from several sources without having to go all over looking?
Where can you find the most personal and confidential service when obtaining an automobile loan or lease?
The answer to all those questions is right at the dealership.
Yes, technology and bank mergers are changing the way a customer looks at where they go for their automobile loans. What has evolved is the centralization of loan decisions. That is, in most cases you can't walk into a bank branch and speak to a loan officer. You typically give your information to a customer service representative who forwards it to the home office for approval consideration.
Those representatives are doing the same thing our dealership finance manager does. The difference is that the dealership loan specialist can shop several sources for the customer to get the best interest rate and terms.
Here are some of the reasons why using the automobile loan specialist is the best choice:
Special interest rate programs.
Higher level of service.
Convenience of handling customers' purchases and arranging their loans at the same location.
Exceptional terms and downpayment requirements.
Best opportunity to obtain financing for customers that have had previous credit problems.
Transaction is handled in a professional and confidential manner.
Usually dealerships have direct contact with the customer's own bank or credit union.
Low fixed, simple interest rates.
Before approaching the customer to gain his or her financing business, the first thing you must know is there is no better place to finance a vehicle than right at the dealership.
Look the customer right in the eye and ask them, “If I could show you a better financial arrangement with a higher level of service would that interest you?”
Then do it!
Ron Martin is a national F&I Sales trainer and the author of the book, “The Vision of Finance and Insurance.” Learn more about his book, seminars and company, The Vision of F&I, Inc., by visiting www.thevisionoffandi.com or calling 219-637-2796.