One of the most important roles in the special finance manager can have is the "credit counselor". Most often, talking advice for you "no sale" or turndowns, in an effort to maintain them and possibly sell them a car later, after being "renewed" their credit ratings. A proactive approach to concept takes the role of consultant credit to these customers sell a car now, during the presentation of sales. Doing so will help you control the process, keeping the client focused on the "Case Credit" and away from " Decision product "until you're ready to do so. Taking a credit counselor to conduct these customers will also help keep their expectation and logic.
While bad credit may be obvious to anyone who examines credit reports all day, sometimes the client may not realize what their credit issues can be. Credit counseling is an effective way to maintain control of the specific funding process sales. If the procedure is done correctly, the expectations of the applicant should maintain a reasonable level.
So, first of all, what exactly is bad credit? The numerous types of credit report problems is a sign of poor credit and could cause a lender to reject the application for a loan. Such problems include: missing a credit card payment, defaulting on a prior loan, filing for bankruptcy in the last seven years, or not paying taxes. Other black marks on a credit report includes a decision filed (perhaps for non-payment of spousal or child support) or any collection activity. For many special guests that funding may be regular occurrences which do not consider bad credit.
The process of credit counseling begins with an interview with the client. The credit application will be reviewed during the interview the client. Take time to learn whether there are potential pitfalls. Look for gaps in housing or employment. Learn the characteristics concerning living arrangements of the customer. Do you rent or own; Is the monthly cost of splitting with someone else? Income is properly reported and verifiable. This starts the discussion in a non-confrontational way. Not only do you get to know your client, but this process takes clients to speak freely for themselves.
Once the application has been fully revised, it's time to move on the credit report. Remember that the goal here is to keep the client focused on the "Case Credit" and away from the "Decision of the product." Take time to explore file their credit institutions to see if there is an explanation for any issues that may to occur.
Very often, reviewing a credit report to a client consisting of just marking all derogatory information in a big, red marker magic. Pick up all the red flags as possible and beat the customer into submission. Public humiliation was to get customers to recognize bad credit, and to accept that fact. All of this is the name of big profits!
Effective credit counseling involves getting a customer to identify credit issues, without humiliation. Review the full credit report, mentioning not only derogatory information, but the positive accounts. Look for a positive reference credit that can be used to build a case to present to a lender. A former auto loan paid well enough, or even an auto loan that paid for a long time before they recovered can be used as a positive reference. Search the standards of good credit may have preceded the current problems with their credit ratings.
Ask your client if there was something that happened to them leading up credit problems. A catastrophic event such as a serious illness, the employer is closing or going out of business, a military call-up, or any number of personal tragedies can lead to credit issues. Now is the time for your customers to tell their story, so you can relay to your lenders. Review each line on the credit report with the customer. Ask for explanations and notes as appropriate.
This may take a little longer than you're used to, but it helps to create the conditions for reasonable expectations of your customer. It also shows them how much work ahead of you to get a loan approved them.
Take some time to explain the process. After reviewing credit, explain how a lender determines whether to approve the application. Review S.A.W. In principle, most lenders use to examine the applicant. - The stability, capacity and willingness to pay. Remember that many "D" grade lenders look at more than just the credit score of the applicant, and in many cases, these lenders do not consider the applicant's FICO score in the adoption process. Marginal lenders see the whole picture to determine whether approve an agreement. Applicants with a history of stable employment and residence and a decent income stands a better chance of getting approved for a loan, even with a patchy credit bureau, because the lender knows that they will be able to collect payments, even if it's just the end of each month!
Explain "debt to income" and "payments to income" ratios to your customers and how lenders use to determine which vehicles will qualify. Many customers want a lot more vehicles than can be given, the logic is "I can not afford to pay that much." Explain how lenders are using all available data are the vast number of loans they have determined which loans are more likely to be returned and base their decisions with that date. They know that any payment which is more than 20% of the income of the applicant has a much more likely to result in a default and recovery. The lenders want to collect payments, and structure approvals with based on the data. This is especially true if the client had a history of slow or late payments in the previous auto loan. The lender information, "if he could not make that payment without any problems, I want my payment be less it! "He explained that the excessive monthly obligations eat up a significant portion of their income, most lenders will only consider candidates with less than 50% of income used to pay monthly bills, including rent. This especially true with a client who has an open auto loan and had no intent on the transactions in. In each case, explain that the lender will usually require a co-signer, but the request and see what they say . Put the decision lenders your hand and let your customers bear the burden of fulfilling the obligation of the lender for approval.
Take a few minutes to explain how equity can help with adoption. The lenders like to loan for less than book or wholesale value of a vehicle to marginal customers. Sometimes a large deposit may convince a lender that the applicant will make payments as they have a stake in the loan. Remind your clients that while many lenders may consider a loan without a deposit, usually wanted to see their taxes, tags, and fees paid upfront by the client. Many customers who say they do not have the money available for a down payment, you have the money intended to pay these fees. Not view them as an advance, so be sure to ask how they plan to pay taxes, tags, and fees for vehicles trying to buy.
Many customers will go from dealer to dealer trying to get a loan. Often times, they apply to multiple sites touting easy approval credit for bad credit customers with the hope that someone will approve a loan for them, or give a better approval than might have been taken elsewhere. As a credit counselor to explain that, for the most part, traders are working with their own lenders. While there may be one or two new lenders outside the market, know and work with almost all available lenders. He explained that the call back from these lenders is based on information provided and therefore will not vary from dealer to dealer. In fact, to explain that multiple applications can lead a lender to turndown an application because of "excessive inquiries", which can cause a lender to believe that the customer tries to buy many vehicles at different dealers.
Set customer expectations in reality is sometimes the hardest part of running advice. Explain to the customer that lenders are not simply to help an agency sell a car, but to ensure that they can collect on the loan. Giving a customer a loan to a lender believes that the client can not afford nobody any good. Lenders do not want a loan today only to recover the vehicle tomorrow; They make their money only if they can collect the payments. He explained that in order to help rebuild their credit; Customers with credit issues need to "crawl before you walk." This is all part of the process of rebuilding their credit ratings. There should be a strong foundation to build on; Nobody builds a house from the roof down!
Lenders realize that credit problems usually result in the regression for these customers. Your job is to help them overcome these obstacles. This is usually the beginning of the process to rebuild their credit ratings. You should start with a vehicle that will not only fit their budget, but also provides reliable transportation and rebuild their payment history. Following the favorable course of payment is in the office their credit, they can move onto a better vehicle with more favorable terms.
Let customers know that your agency will be there in the future to let them know when the time is right to make that move. As automotive consultant in their honor, you are contacted to help move them along the path to better credit! Not only will you get an auto loan with your help, but paying this loan on time, are well on their way to a credit card and maybe even a mortgage. You can even provide a list of banks that offer Visa or MasterCard accounts for people with credit challenges, or information that can help them improve their credit reports for free, instead of throwing money away on a scam "credit repair" company.
For the review of the credit counseling:
o Review of credit application
o Review of credit bureau
o Look for positive and negative reports
o Explain the procedure
o Explain and saw how a lender consider the request
o Review of the debt to income and the payment to income ratios
o Determination of available payment
o Set customer expectations with reality
o Review of qualifying vehicles
o Review how to improve the loan
o Explain the process of rebuilding credit
o Explain "shopping credit"
o The effect of excessive investigations
Being a credit counselor before the sale will help you book that many more special finance sales. Take time to talk to your customers for the credit situation and prove that you can give some answers to their problem. If you do this before, we establish a relationship with those customers that will allow you to maintain control over the sales process, which is needed for special funding. Not only that, but prevent you from training a client thought it was a no sale, just send him somewhere else to buy a car.
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