Increase Your Indirect Auto Loan Volume

I read an article recently on how to drive more indirect lending and was honestly shocked by the lack of understanding of the automotive dealership space. Tips included holding contests to pit dealerships against each other, holding annual golf tournaments where dealers can be sponsors, passing out branded gimmicks, and monitoring dealer activity and following up when you see trends you don’t like.

While the article did sprinkle the message throughout for lenders to be actively engaged with dealerships, it did not give proactive examples of how to achieve active engagement. Lastly, and perhaps most shockingly, the article directed lenders to prioritize their goals above dealership goals, going so far as to say, “Do what’s right for the lender, not what is right for the dealership.”

Here’s the real secret that the truly successful indirect auto lenders don’t want you to know: increasing your indirect auto loan volume is as simple as aligning your goals with dealership goals. You want more business. Great, so does the dealership. Rather than looking at how to market to dealers, take the time to evaluate how to cultivate a lasting business relationship with them.

Dealers don’t need another golf tournament to sponsor, or the added pressure of a competition with the dealership across the street. They are already competitors, and if you’ve ever met a dealer, you know that competitiveness is in their blood. What dealers need is a way to make them better than the competition. This is where lenders can plug in. Think about the dealerships you work with and ask yourself, “How can I help differentiate them in the market?”

• How many of your underwriters have spent a day in the finance office of a dealership, learning the ins and outs of the responsibilities and challenges F&I managers tackle on a daily basis?
• Are your underwriters on a first-name basis with dealership finance managers?
• Are they scheduling regular visits to review process changes, and find out how your institution can be a better partner for the dealership?
• When an application is flagged by your system for denial, how often does your team get on the phone with the dealership to discuss how to make the deal work?
• When applications are submitted after 5 pm, do you have someone on staff to review those applications that can’t be automatically approved, or do they sit until 9 am the following morning?

All dealers are struggling with reducing transaction time, and that is one area where lenders can either hamstring the process or significantly speed it up. The dealers who get deals done in a timely and compliant manner will position themselves well ahead of the competition, in the minds of consumers and regulatory bodies.

In addition, the more options you provide dealers on how to increase their profit margin in a compliant manner, the more likely they are to choose your loans. How can this be done? The answer lies with consumer protection products, likes a vehicle service contract or vehicle return.

Providing complimentary products such as these set the stage for upsell opportunity, making it possible to increase your margins as well as the dealership’s PRU. By providing a valuable service to the end-consumer, it’s easier to familiarize them with the benefits of the product and position the upsell as just another way to extend those benefits.

Increasing your indirect auto loan volume is not rocket science. All you have to do is change your mindset about dealers and treat them with the same respect you would any other business partner. Give them your time and you will see immediate and strong results. They don’t need gimmicks, but rather a partner who understands their business, and aligns their goals and processes to meet the challenges you both face.

With almost 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 custom-tailored to match your dealership-partners’ needs.

Increase your indirect auto loan volume today with EFG.