It’s not too late to get a head start on your competition when it comes to kick-starting your loan portfolio through an indirect lending program. Indirect lending caught fire last year, and many industry experts don’t expect it to slow down any time soon.
A good indirect lending program is composed of three vital components: underwriting, processing, and dealer management. There are several tangible and intangible pieces as well as benefits of a successful indirect lending process, but the newest trend focuses on dealer management. If they haven’t already, credit unions across the country will be looking for innovative ways to streamline their dealer management operations and uncover new opportunities that otherwise weren’t available through their previous dealer management practices.
The right dealer management strategy serves as the lifeblood of your indirect lending program. Without it, the underwriting efficiency and processing speed of your operations are moot points. However, if you manage dealers effectively, it will put your underwriting and processing capabilities to the test.
Some tangible and intangible benefits of dealer management include:
Signing and managing dealers — This starts with market research. Find out where dealers turn for financing and why they use those institutions. When dealers add a new lender to their options, the new kid on the block must have a program that is competitive and adds value to the dealer’s arsenal of lenders. Don’t be just another option; stand out from the rest with your offers and service. Then, constantly monitor and strengthen your relationships. Understand exactly how each dealership structures its deals — find out who is responsible for placing the deals. This could be the sales manager, general manager, F&I director, F&I manager, or in some cases even the dealer principle.
Resolving issues — Carefully resolve issues through quick yet thorough two-way communication. Find out a dealer’s preferred technology to communicate — email, phone, texts, etc. — and be available. Also, be clear to dealers about your expectations and what you need to fund a deal. At the same time, remember that the easiest process for the dealer is the most attractive. If an issue arises, don’t leave the dealer hanging. You’re working for the dealer as much as for yourself, so the success of your indirect lending program goes hand in hand with your dealers’ ability to close as many deals as possible in the shortest amount of time.
Program presentation — Make your marketing efforts just as creative and attractive as your loans. Finding ways to catch the eye of both dealers and consumers will help you be their first option when sitting down to close a deal. Dealer participation incentives such as contests and giveaways are often effective in building program loyalty. Find the niche in your program that solves a need for your dealers. Present this as often and as simple as possible so your dealers understand why they should choose you.
Serving as the middleman — You’re the bridge between your financial institution and the dealership. There’s a fine line between serving as an advocate for your institution and serving as the relationship manager for your dealers. You want to make both happy must deal with restrictions from both sides. This can be the hardest task of all, so have your ear to the ground and be ready to offer terms and service that meet both of their expectations. Otherwise, some other institution will.
Develop and maintain close relationships with dealers — Constant focus on your relationships will springboard your program to growth. The best way to do this is to be visible early and often. Frequent visits and strong feedback will allow you to evolve your program to meet the constantly changing needs of dealers. Take them to lunch, base incentive programs off their feedback, and get to know them as more than a business partner. After all, the old adage is “friends want to do business with friends.”
Is your dealer management strategy poised to deliver the growth you need? The CRIF Select division of CRIF Lending Solutions offers the solutions and expertise to help financial institutions get a leg up by making sure they are well positioned to capitalize on the emerging trend of indirect lending. Click on the button below to download our "Top 10 Questions to Consider Before Starting an Indirect Lending Program" checklist.