Category: Business Growth

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Business Growth F&I Government Regulations

What’s Your Value Proposition for 2014?

Contributing Author: Steve KleesWhen you walk into a dealership, what value do you bring to the F&I office besides another loan for which their customers may qualify? In 2014, F&I managers across the country are concerned with three hot buttons:

  • Compliance
  • The Consumer Financial Protection Bureau (CFPB)
  • Maximizing profitability

As entities like the CFPB increase the pressure on compliance practices, F&I managers have a difficult job on their hands to balance compliance with profitability. The best way to separate your loan from the competition is to help them with this balance. How do you do this?

Understand your role in compliance culpability. As seen recently, the CFPB is targeting both financial institutions and dealerships for discriminatory practices. In December, they ordered Ally Financial to repay $80 million to consumers, whom the CFPB alleges were discriminated against. If you haven’t already, it’s time to evaluate your processes in approving auto loans to ensure your own compliance.

Provide clear standards for loan approvals. This not only helps with compliance, but helps F&I managers ensure that they submit well-qualified customers for your loans. You know your qualifications, but how well do F&I managers? Look at how often you deny auto loans. If that number is high, it could be because your standards are unclear to the F&I officer.

Provide more options to F&I managers. Traditionally, when you approve a loan, the F&I manager marks up your interest rate to help increase their profit margin. This very practice is what is under intense scrutiny by the CFPB. So, consider stepping outside tradition and provide options to maximize profit by structuring your loan with complimentary consumer protection products. By offering products such as vehicle return or a vehicle service contract, you set the stage for the F&I manager to upsell those products and get a greater share of the return. Offering complimentary products with upsell opportunities neatly nullifies compliance issues and increases profit for both you and your dealership partners.

With over 36 years in innovating and implementing proven go-to-market strategies in the dealership space, EFG Companies understands the balance between ensuring complete compliance and increasing profit. That balance lies in the value proposition. Which is why EFG structures its products and services to not only provide value to you, but also dealerships and the end-consumer. Our unmatched client-engagement model goes well beyond simple product innovation to mitigating liability through superior claims processes, and continuous training and follow-up.

Learn how EFG can take your value proposition to the next level in 2014.

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Business Growth F&I

Preparing for 2014

Eric Fruithandler, Senior Sales Executive, Specialty Channel2013 is almost over and 2014 is upon us!

How did you fare in meeting your 2013 business goals?

How about preparing for 2014 initiatives?

Throughout the year we saw competition heat up as larger lenders got back into the subprime market, forcing underwriting standards to loosen across the industry. As larger banks and credit unions began offering more pre-crash terms and pricing on subprime auto loans, smaller institutions that focus on subprime lending have struggled to retain organic growth and keep their customer portfolio filled with well-qualified customers.

To regain market-share and outperform organic growth in 2014, subprime lenders need a two-pronged strategy to compete with increased competition for loans.

Insulation

The first step is to insulate your business from big lender competition. How do you do this? By focusing on your strengths! Those big lenders are still very wary of the subprime market; if there’s the slightest chance of significant volatility, they will jump ship. However, because you’ve weathered the storm through the Great Recession, you know how to manage more volatility in the market.

Part of the reason subprime auto lenders survived was because of their focus on customer service. By fortifying relationships with dealers and customers, and being flexible in tailoring their loans to meet consumer needs, those subprime lenders found a way to flourish in one of the toughest economic downturns in U.S. history. That strong focus on customer service will set you apart as competition increases. Throughout 2014, continue to ask:

  • How can we increase efficiency and courtesy in responding to applications?
  • How can we provide more value to both our dealership partners and the end consumer?
  • How can we increase transparency within our parameters to ensure our dealership partners know which customers qualify for our loans?

Attraction

The second step in the strategy is to make your auto loans more attractive for greater organic growth. This goes hand-in-glove with insulation as you cannot make your loans more attractive without good customer service. Concentrate on providing tangible value to dealerships by helping dealership personnel present more qualified customers by ensuring they understand your standards, and by responding quickly and efficiently to all applications.

Differentiate yourself beyond terms and pricing with consumer protection products, such as a vehicle return program, a vehicle service contract, or a limited powertrain protection plan. Products like these boost your bottom line, your dealership’s margins and protect the pocket-book of the loan applicant.

By focusing on customer service, flexibility and value, it is possible to tailor your portfolio to perform better in 2014. With over 36 years serving as an industry innovator of consumer and vehicle protection programs, EFG Companies is committed to the continuous development of innovative products and services paired with go-to-market strategies and execution support across a multitude of channels.

Find out how we can help increase your loan volume and performance while providing additional upsell opportunities to accelerate revenue growth. Contact EFG today!

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Business Growth

Five Keys to Success for Subprime Lenders When Expanding to New Markets

Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Subprime lenders are in growth mode and rapidly expanding in 2013.  With expansion to new markets comes a myriad of challenges for the lender.  Some of the challenges are faced directly by the lender itself and some possibly by the F&I Managers at the auto dealerships with whom they do business.

Here are five keys to success for the subprime lender when expanding to new markets.

  1. Understand specific state laws and requirements.  Most lenders are likely very familiar with the laws and compliance measures that require attention in order to conduct business in a new market.  For example, making sure your retail installment contract is state compliant is an obvious first step prior to moving in to a new market.  However, if the lender markets its own suite of consumer protection products, it’s important to ensure the product administrator has done its due diligence to secure appropriate state approvals and has made necessary adjustments to its contracts as well.  Handling all the state-specific requirements up front will facilitate a smooth transition to success in a new market.
  2. Know the demographic trends and how they impact buyer behavior.  If a subprime lender is making a move to enter a new market, the demographic study and analysis has already shown a viable business opportunity.  However, do the market indicators for unemployment, the local income metrics, and consumer confidence provide an unique opportunity for lending and the sale of the lender’s consumer protection products?   If so, what is the strategy to capitalize on this new market’s opportunities?  Answering these questions will help a lender tailor a meaningful, successful loan product offering in the new market.
  3. Ensure your consumer protection products are a fit.  Different markets may present opportunities for the lender to differentiate its loan offering.  Ensure the consumer protection product offerings provide a solution to a consumer need in that market.  Be confident that the marketing, pricing and product features speak to the demands of the new market and provide an opportunity to realize a profit.  The right loan offering with appropriate protection products in the market will help drive success.
  4. Delivery mechanisms must be sound.  Once a sound strategy is in place to facilitate the loan transaction and deliver the lender’s retail installment contract, ensure a stable electronic platform is in place to rate, contract and submit the consumer protection products.  The demand for e-commerce has never been stronger, so providing an e-solution to fulfill contracts is essential.
  5. Maintain your brand.  Whether the lender operates with a direct or indirect model, it’s imperative that the lender effectively communicates and manages its brand.  From an engaging and up to date web presence, to SEO, to effective brand reputation management, the lender should pay close attention to its brand and all its brand promises as it looks to expand and grow in to new markets.

EFG Companies has a proven track record in helping lenders expand their reach in to new markets. Contact EFG today to develop a strategy designed to help you realize success as you grow your business.