No auto lender needs to be reminded how competitive their business is. But what’s the best way to make both your dealer partners and retail borrower customers happy?
Having low interest rates and reasonable payback terms certainly help. For example, Space Coast Credit Union in Melbourne, Fla., offers competitive interest rates and loans as long as 84 months on vehicles built in 2012 and later.
But as Dan Haer, head of distribution at TD Auto Finance in Westlake, Texas, notes, “Any bank’s products, programs and pricing can be matched with relative ease.” So lenders have to compete more than on just price.
Doing so starts with building a team that thinks like “car people,” he says. “From the credit desk to funding and sales, our entire team has deep knowledge of the automotive finance business. We provide personal service and attention to dealers’ needs. Our Dealer Relationship Managers (DRMs) are well versed in dealer operations.”
“Dealer relationships are cultivated over time,” he adds, noting that all dealers have different needs. “There is no ‘cookie cutter’ approach to a dealer’s success,” Haer says.
The bank’s auto finance reps “take the time to listen to each dealer’s unique needs: where and how the dealer wants to grow the business. This is a critical step to building not just strong relationships, but mutually beneficial business partnerships that will sustain over the long term.”
The bank also recently started to offer special products and services to reward its “most supportive” dealers in order to deepen those relationships.
Space Coast’s Watchdog program rewards dealers that provide good service to the credit union’s members and drive business to the lender, says Jodie Kinley-Smith, indirect lending sales manager.
Credit union members are asked to rate their car buying experiences and post reviews on the CU’s website. Products and providers that earn a rating of 4.75 or higher (out of a possible 5) earn the Watchdog symbol, which promises “no lies, no rip-offs, and no time wasted.”
Need for Speed
Both Royal Credit Union in Eau Claire, Wisc., and Kinecta Credit Union in Manhattan Beach, Calif., say being consistent and responsive to dealer needs and requests – and doing it quickly – are the key elements to good dealer relationships.
“We try to make the process as easy as possible for the dealers to get the vehicle financed, because ultimately that will make it the best experience for our borrowers,” says Brandon Riechers, EVP and chief lending officer at RCU. That includes speedy decision times and next-day funding, with dealers being paid electronically, and being able to discuss deals live with a loan officer. In order to do that, the credit union provides expanded hours in order to be available to its dealer clients.
Donald Peaks, vice president of consumer lending at Kinecta CU, says auto lending is essentially “a very simple business, but you actually have to do the things you say.”
“The biggest thing we’ve done is being easy to do business with,” he says. “A lot of companies think that means they have to do everything the dealership wants or the customer wants. It’s not really that. It’s always picking up the phone, it’s being available to answer questions and explain things. And be really fast; that’s really what we focus on, particularly on the funding side.”
Peaks says the CU funds contracts in about a day.
“Its simplicity and speed,” he says. “Be fast, be consistent and be easy to do business with and it will be a successful model. It translates everywhere. I’d love to tell you it’s more complicated than that but it’s just not.”
Kinecta also doesn’t worry about what the competition is doing. “That’s one of my hot buttons,” Peaks says. “I don’t allow my sales staff to talk about how we are going to compete against other lenders. To paraphrase [legendary former UCLA basketball coach] John Wooden, if you just compete against others, you’re only going to be better than them, but you’re not going to be your best. So we really don’t focus on what other lenders do. We prefer to make them focus on what we do.”
Like This Post