Greg Goebel is the CEO of Used Car University LLC.

Greg Goebel is the CEO of Used Car University LLC.

I have spent much of this tax season on the road, working with dealers to improve their special finance processes. The year is off to a great start, but I have noticed a disturbing trend: The number of contracts in transit is on the rise.

The deal has been contracted and signed. Your customer is speeding around town in his or her new ride. But you have yet to see the cash. Why?

The answer most likely lies in your own approval process — or lack thereof. Banks and finance companies often brag about how lightning-fast their funding is. The reality is they won’t write a check or send an EFT until the deal is complete. If you don’t have a system in place that allows you to contract deals properly, and if that system doesn’t make you tick off all the stips each finance company needs, your contracts in transit will continue to pile up.

Industrywide, it takes an average of 14 calendar days to get a deal funded. You can do better. The benchmark is seven days.

Let’s say you sell a car on a Tuesday afternoon. You’re not really thinking about getting the deal shipped that day and, in any case, somebody has to review it first. So you send it overnight the next day. With any luck, it arrives on Thursday morning and it’s in the funder’s queue that afternoon.

The funder makes sure all of the stips are in place and makes a few calls to verify income, residence and insurance. If everything goes smoothly, the deal is approved sometime Friday and the funder submits a request for an EFT. On Monday, an e-mail arrives to tell you the EFT is on the way, and the money is in the bank when you wake up Tuesday morning.

Sounds easy, right? Well, it often is. But the devil is in the small details. If Thursday and Friday don’t go well, all the work you did on Tuesday and Wednesday goes out the window.


The best way to get funded quickly is to be absolutely sure every stip is accounted for before you submit the deal. As a former dealer, I know that’s not always possible. I spent 18 years on the retail side and delivered more than 11,000 subprime deals.

We didn’t get to that number by letting customers walk away just because they forgot to bring in their phone bill. But we didn’t make life hard on our finance companies, either. After doing our homework to be sure there was no indication of fraud, we delivered the customer and had a process in place to collect the stips.

Yes, we were taking the risk that the deal might have to be reeled in. We felt comfortable with the prospect of losing one out of every 20 deals. You will have to decide what works for you. I recall from my days as a dealer that many of our competitors weren’t comfortable with any level of risk. I know because we sold a lot of cars to their customers.

We worked with 54 lenders and had the perfect inventory for special finance, so all we had to worry about were 54 different sets of rules. Some finance companies provided their own checklists, and we used them. We even stacked the stips in the exact order they were listed on the checklist.

Remember what I said about Thursday and Friday? The funder’s queue is full of deals, and they all have to be reviewed. But funders are often paid on a performance incentive. They’re looking for deals they can fund quickly. I knew that if we put a little extra effort into the packaging, our folders would start to move to the top of the stack. I can even remember a few cases where we submitted a stip after the deal was approved and the funder swore it was there all along.

We created two forms for the finance companies that didn’t provide a checklist: The first was a four-page sales rep worksheet that listed all of the stips that should be collected upfront. The second was a four-page funding checklist. I still use those forms today. If you send me an e-mail, I’ll be happy to share them with you.


At my dealership, we employed an auditor we affectionately called the “Deal Nazi,” after the Soup Nazi on “Seinfeld.” He would review every deal the same way the funder would: He would check the math, review the stips and make the calls to verify residence, income and insurance. If there was anything missing, he would send it back to the finance office. If it was good to go, he would ship it.

Did we make exceptions? Of course we did. If the customer’s last payday was four days ago, it could be 10 days before he or she could provide the next pay stub. No harm done. We would convene for a daily “Save-a-Deal” meeting to hash out which deals were incomplete, what was missing and when we could expect it.

We could never use those meetings to complain about customers and point fingers at each other. We were trying to create a culture that put a premium on fast funding. To that end, we came up with the “3/6/10 Rule”:

If the deal wasn’t approved by the finance company by Day 3, we had to have the car back on the lot by 5 p.m. If all the stips weren’t in the dealership by Day 6, same deal. If the money wasn’t in the bank by Day 10, well, take a guess.

If you’re wondering whether implementing all of these new rules and processes is worth the effort, let me share the following case study: Several months ago, a California dealer brought me out for a two-day consultation. I arrived to discover a serious problem. He had a stack of con- tracts in transit, all between four and five months old.

I told him they weren’t car deals. If they were, they’d be funded. He agreed, and we went to work. We plowed through the old deals, put a new process in place, established the 3/6/10 Rule and authorized two auditors to approve deals. The dealer then fired his general manager on the spot.

You have all the tools you need to meet the seven-day funding benchmark. Develop a plan to work through your contracts in transit and get caught up. Implement the process I have described, use my checklists — and your finance companies’ checklists — and do whatever it takes to stay on track.

This could be a big year for your store. Don’t let unfunded deals get in the way. Until next month, great selling!