Customer Education

Sales personnel across the country are barraged by enraged customers demanding better rates and loan terms. Obviously, the special finance segment of the auto industry is not the same as it once was; although, some customers haven’t seemed to figure this out. Special finance salespeople are taking the brunt of this aggressive behavior. Everyone is pointing fingers at the finance companies, dealers and government agencies. There are a lot of excuses. Business is off, in some cases at an all-time low. What is the answer? The answer is customer education. I have seen certain stores reduce the tensions created by tighter financing standards by utilizing some simple principles.

First, these stores explain to the customer what a credit bureau is, what it provides and how it affects the finance process for consumers. This might include an explanation such as:
 
“Mr. Customer, your credit score is like a report card that shows your credit history and current status to prospective finance sources. Once information hits your credit report, it will stay there for seven to 10 years. If you disagree with any item on your report, you can take measures to improve your situation. Please realize that credit reporting agencies are for-profit businesses that operate just like any other business entity. You are entitled to dispute any item on your credit report that you feel is wrong.”

Usually this explanation will open up a whole new can of worms; however, the wrath of the customer will no longer be directed toward the dealership and will be pointed in the right direction, toward the credit reporting agency and/or the source that sent the information to the credit agency.

Customers need to be coached on the best methods to repair their credit. In most situations, I recommend utilizing a credit improvement expert. The choices in this arena are plentiful; a short Google search will pull up a long list of companies eager to help the consumer (for a nominal fee). If the customer chooses a solid company with good references, they can almost always improve their credit score. The customer can also contact the credit agency on their own in an effort to better their credit outlook, but unless they have a lot of free time, want to learn a new hobby or enjoy writing lots (and I mean lots) of letters, the money spent on a credit expert is well worth it.

Dealerships can benefit from making the extra effort to educate customers about there  credit score. The short time it takes to help a customer can be extremely beneficial (and profitable) down the road. Customers need to realize that all sorts of bad credit listings can be removed or altered. The list includes but is not limited to bankruptcies, collections, foreclosures, repossessions and late pays. Customers can learn what it takes to increase their credit score and thus get more advantageous terms for vehicle loans. Sometimes this is something as simple as paying down a credit card below 50 percent of the limit balance.

An area to really emphasize to customers is the fact that credit reporting agencies are for-profit companies. They are not part of the government. For reasons I don’t understand, people seem to think that these credit agencies are not regular businesses. The fact is, they’re just regular businesses trying to maximize their profits. These agencies are regulated by the government and are required to handle all credit disputes. However, people need to realize that credit disputes cut into these agencies’ profits because of the time and effort involved with handling them, thus, they don’t like to deal with them.

A person can normally expect little to no help from an agency in the initial stages of a dispute. Anyone can obtain a copy of their credit report online for free one per year. Advise your customers that once they’ve secured a copy of their report and started the process of fixing the listings, they should make no mention to the credit agency of trying to initiate a credit repair; they should simply mention that they are disputing a single credit listing. Make your customers are looking out for their best interest.

Another trend creating heat in special finance is the practice of customers going online to get “approved” before shopping for a vehicle at the dealership. Customers are using the Internet to originate loans at an ever-increasing rate in an effort to save money. These customers print an approval letter from the corresponding finance source and go shopping. This letter usually winds up in the hands of the sales manager or finance manager after the deal have been worked out. This manager then tries to figure out all the terms and fine print in the approval letter.

Chris Cain, general manager at Rob Green Nissan in Twin Falls, Idaho said, “This is truly becoming a problem in our stores. These customers come in thinking they are approved on a loan and expect us to accept all terms the finance company is throwing at us, which include some outrageous fees and loan originations. This just doesn’t pencil out. We are continually in an educational process with our customers in showing them that we have access to the best lenders in the country for their needs.”

The bottom line is our industry is changing at a rate like never before. We can choose to fight changes and do business how it has always been done, or we can educate our customers, train our staffs and win this war! I prefer the latter.