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    Christine Taylor is a Sanford, Fla.-based freelance author. She writes for numerous trade publications, including the Florida IADA. She can be reached via e-mail at

    Christine Taylor - Sanford, FL

What Comes First: The Sale or the Financing?

Appeared October 2014 - volume 11 - issue 10 - page 18
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"You cant have one without the other, so build every deal from the beginning with the end game in mind."

There are a lot of mysteries in life. What happened to the lost city of Atlantis? Does Bigfoot really exist? Who shot JFK? For car dealers, unlocking the secret to sales and financing isnít science fiction, but it can be cause for good debate. Is it best to sell the car and then find the financing, or secure the financing and then find the right car? The answer is a little of both.

When a customer comes to you looking to make a purchase there are a lot of things that happen almost simultaneously. The salesman has to build rapport without being pushy. The customerís transportation and budget needs have to be understood and evaluated. The inventory has to provide the right choices for any scenario and the money has to be available to make it all work. If one of those moving parts breaks down, the deal is put in jeopardy and you and the customer start edging dangerously close to feelings of frustration and distrust. Is there a more worse-case-scenario than walking a customer through the sale, ironing out the financing details and then finding out it wonít be approved? Make sure to not let that happen by always viewing a potential sale through the lens of its financing. Hereís how:

Set the Stage

If your website does not have an online credit application, then stop right now and get one. An online credit app makes it easy for the customer to submit their information and for you to be one step closer to locking in their financing. Often, car shoppers who have the intent to purchase are eager to complete a credit application to determine if they are pre-approved before coming to the dealership. This provides the dealer with the advantage of knowing what the customerís challenges may be before the sales process begins. While the formal credit application and loan approval will still need to happen in the dealership before the transaction can be complete, gleaning this preliminary information will help you set the deal up for success from the start.

Have the right inventory

Everyone knows the right inventory is essential for a car dealership, but what are your parameters for finding it? Are you out scouring the auctions for low-mileage units you think your customer may want to buy? Of course you are, but, maybe itís time to expand on that theory of thought and ensure that it is not only a car they want to buy but one they will be able to get financing for. Here is an industry tip that can help: Find out what your lenders are financing and use that as your guide when hunting inventory. Give your lenders a call and talk with them about the kinds of deals they have been working lately. Ask what the top five makes and models are that they have financed over the past few months. What were the mileage ranges? Are there any trends that are noticeable? If you do this on a regular basis, you not only will be able to pretty much guarantee you will have financeable inventory but also you might be able to infer some things about the marketplace. If you pay attention and keep track, you may find clues that can help you intuitively know what customers are looking for as well as assuring yourself that you will be able to get paid.

Understand the numbers:

Finding out the entire financial story, whether verbally through an interview or electronically with an online credit form, is needed to structure a sound deal. It is vitally important to be clear on the customerís monthly income as well as where that ranks among basic industry benchmarks for payment amounts and debt to income ratios. Designating inventory on the lot that would be ideal in a variety of scenarios will help salespeople steer the customer to what might work best.

Make the right match:

The market is overflowing right now with lenders who are ready and available to finance a sale, so take advantage of the competition and selection. Build relationships with enough finance companies to have a spot for any customer that walks on the lot. From deep subprime to prime plus, have one or two lending options available for each market. Go beyond just maintaining a list and find out from the financing companies what they are looking for in a customer. They may all be after the same type of demographic, but understand their corporate philosophy and culture. Now is the time to be a match-maker and truly understand the needs and interests of both parties so when the connection is made, it becomes a sure thing.

If you have been in the car business for any length of time then you know that it always comes down to the right customer, with the right car and the right lender. Understand how these three elements are connected and how to balance them with equal amounts of preparation and attention. Doing so just might keep you from counting chickens before they are hatched, or rather, sales before they are financed. The answer to the age old question of which comes first, the sale or the financing, is really neither. They need to be coordinated to happen at the same time.

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