The Oscars Of The BHPH Industry

The first award is presented to the month of February, which is often the best sales month for BHPH dealers, but unfortunately is also often the worst month for charge offs when reviewing static pool data.  So how can a month that seemed so good at the time wind up looking so dismal when viewed in hindsight six to nine months later?

One of the biggest lessons that we have had to learn the hard way over the years is that the very same down payments that tend to make this time of year so exciting can also lead to a false sense of security in underwriting.  More and more, we have come to realize that a large down payment does not guarantee that a customer will pay.  This is especially true when the large down payment is the result of “found money,” or money that they did not have to save to accumulate.

Of course, the most common source of “found money” this time of year is income tax refunds.  While having substantial cash for down payment definitely helps you put deals together in many ways, don’t fool yourself into thinking that it is going to turn that edgy applicant into a great paying customer.  The next time I see that happen will be the first.   Use the cash to minimize (or eliminate) your cash in deal, but make sure the customer can afford the payment, otherwise that big down payment may be the last dime ever collected on that account!

The Clean Sweep Award. 

This is given to the person who is best at brooming customers off your lots.  This award is proudly presented to … every salesperson who pre-qualifies based on appearance.  I think every dealer has war stories of customers who didn’t “look” like buyers, only to learn later (sometimes too late), that their credit was impeccable or that they were cash buyers.

For us, the classic example was a guy that came in to our dealership, looking like he was on his way to the homeless shelter, and driving something that was overdue for an appointment at the car crusher.  Fortunately, our salesperson still gave the customer an enthusiastic greeting and followed the steps of the sale, even if a little reluctantly so.  It turned out that the guy had been involved in a plowing accident and had received a big cash settlement and probably could’ve bought every vehicle in town if he wanted to.  But, he ended up doing business with us because we treated him properly, rather than avoiding him, which is how the other dealers he stopped at that day treated him.   The moral of the story?  “Ya never know,” so don’t prejudge anyone, especially not based on their appearance!

The Yo-Yo Award. 

This award is presented for the topic that has seen the most vacillating of opinion.  This year’s recipient is … video recorded closings!   I know this is an area that has generated strong opinions on both sides, and even the most respected and knowledgeable experts in our industry have gone back and forth on this topic.

On one hand, by video recording all loan closings (usually accomplished by mounting a video camera in the closing room where all deliveries take place), you can monitor exactly what is said and done by your staff at each and every closing.  I know of success stories where a customer accusing dealership staff of wrongdoing quickly backed off when the manager offered to review the recording to see exactly what was said.  Another benefit to having the closings recorded is for the purpose of ongoing compliance training, as these recordings can provide excellent opportunities to review with your staff exactly how the closing should go.

On the other hand, those who aren’t in favor of recording the closing will often point out the expense of the necessary system to accomplish the recording as well as archiving all recordings.  Perhaps even more cause for concern is that the same recording intended to be used to show the client that the dealer did everything right could be used against the dealer if the representative doing the closing doesn’t do everything right (no matter how well intended), but the recording must be later requested as evidence during the discovery process of any court proceedings that may arise. 

One solution that seems to balance both sides is to have a professional, prerecorded video that every customer is required to view at closing.  This will ensure that the same message you want every customer to receive will be delivered in the same way every time.  It is even possible to have these “video closings” produced in such a way that all of the paperwork can be presented to the customer by video, and it can be customized to the paperwork needs of each individual customer.  (For example, if the customer didn’t purchase Life and Accident/Health Insurance that part of the video is skipped.)  If you’d like more information about effective closing videos, e-mail me and I can give you a couple of contact options.

Vol 4, Issue 2