Brien Joyce Vice President EFG Companies

Contributing Author:
Brien Joyce
Vice President
EFG Companies

While everyone is following the news coverage of the impact of Hurricane Harvey, the estimated 500 auto dealers in the Houston area affected by the hurricane are already working to get back up and running. According to Automotive News and Wards Auto, dealers in Southeast Texas expect a surge in car buying as people begin receiving insurance payouts for their damaged vehicles. This means that there will also be a surge in auto financing, and lenders will need to be prepared to help dealers manage their time with each customer wisely.

It can be expected that there will be a period of “downtime” while both dealers and consumers survey their homes and businesses to understand the full scope of the damage. This “downtime” provides lenders the perfect opportunity to prepare their operations for when consumers in the seventh most populated market in the U.S. begin car shopping en masse.

One of the biggest challenges during a car-buying surge is simply servicing the increased traffic. Dealers will often extend their hours as part of their overall strategy to capture as many sales as possible. With that in mind, now is a good time to begin preparing your team to work longer hours to ensure auto loan officers are available during longer dealership hours.

It’s also important to remember just how easy it can be to crash an online platform when a large number of users try to use it all at once. Take the time now to work out a solution with your IT team for a surge in online applications sent via your dealer portals and through your website directly from consumers. Preparing your digital platform to have the bandwidth to handle a significant increase in traffic will help make sure you are able to capture as many loans as possible with no disruption to dealer service.

In addition, when experiencing an upsurge in consumer traffic, it is an automatic reaction for dealership sales teams to rush the car-buying process and focus on just moving steel. This often leads to incomplete applications being submitted, or even an increase in applications that fall outside of your specialty. Remember that dealers are also using this time to prepare their teams, so schedule a meeting with your dealership partners in the affected areas to remind them of your loan requirements and educate them on the best ways to get in contact with a loan officer if they have questions regarding a given application. This will help dealers:

  • keep your considerations in mind when submitting applications;
  • effectively manage your look-to-book ratio in a high-stress environment; and,
  • streamline their finance office operations so they can process more sales in a given day.

Lastly, take a look at what differentiates your auto loan from the others from the point of view of the F&I manager:

An F&I manager has a customer who qualifies for financing through your institution and a competitor. While the competitor’s rate is slightly higher, they also offer complimentary consumer protection products that make their loan more attractive to consumers. To the F&I manager, that attractiveness means fewer refinances, less chargebacks, and a greater opportunity to increase PRU through product upsell. Which rate do you think the F&I manager will recommend?

Considering the lasting effects of Hurricane Harvey, strategic lenders are not only looking at their funding requirements, but also structuring their loans with ancillary products that reflect current consumer needs.

A great example of this is vehicle return protection. In the wake of large natural disasters, like Hurricane Harvey, many consumers are often left unemployed. The memory of that loss of employment will affect their financial decisions going forward. As those consumers regain employment and enter the car-buying process, they will be highly motivated to purchase their next vehicle with a loan that comes with a product that will protect them in the event of future unemployment.

Structuring your loans with consumer protection products, like vehicle return, makes it easier for finance managers to recommend your loan over others, in addition to:

  • attracting and retaining dealership partners;
  • increasing year-over-year auto loan volume and financial control;
  • expanding per month income;
  • reducing default rates; and,
  • decreasing repossessions and collection costs.

With more than 40 years in administering consumer protection products and working hand-in-hand with dealers across the U.S., EFG Companies knows how to structure your loans to be more attractive in the F&I office with F&I products tailored to match your dealership partner’s demographics. Contact us today to find out how.

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