Choosing a Lender

by Scott Brackin

creditmailIn the presence of fierce competition and razor thin margins, it’s more important than ever for dealers to look for lenders who are engaged in innovative ways to protect risk, while providing the best in class service levels for the dealership and the consumer.

Dealers understand non-prime consumers are on extremely tight budgets. Would-be customers walking into the showroom already know exactly what monthly payment they can afford.  To accommodate these potential buyers, dealers rely on lenders to help provide the right interest rate and term. Historically, lenders have relied primarily on the Big 3 bureaus, however those bureaus have limited information on non-prime consumers. Most dealers know that millions cannot be scored. Per the CFPB, 45 million U.S. adults are living without credit scores due to no credit history, limited data or out of date credit data with the Big 3 bureaus. There are also nearly 90 million adults with scores below 650 and that number is just going up.

Top lenders are innovating and learning alternative data is shedding more light on these thin-file, ghost consumers to help them better assess the risk and offer more flexibility in pricing. To be competitive, dealers must work with those lenders that employ all available information —specifically alternative data—to provide a more complete picture. By utilizing lenders that have access to alternative data on those consumers, dealers will sell more cars, minimize buybacks and help to build better customer relationships.

passtimeWhat is alternative data?
Just as the label implies, alternative data falls outside the scope of the Big 3 credit bureaus and includes public and private records procured from governmental and institutional sources and is accessible via third-party aggregators. Alternative data sources could include records from public files, utility and telecommunications companies and others.

From public records, one may access an immense amount of data regarding a consumer’s property ownership, bankruptcies, liens or judgments and relationships. Public records provide asset and adverse action information that may be modeled. Another source of alternative data is tradeline information that offer access to application inquiries, loan performance and consumer stability details. Alternative tradelines provide past loan payment behavior and an understanding of outstanding debt. At the end of the day, what you are looking for is a lender that has a complete the picture of someone’s ability to afford the automobile.

Move more metal
Lenders that leverage alternative data have deeper information on consumers’ buying behavior. These lenders will provide a pricing advantage over those who are not accessing alternative data.

For example, a lender who uses short-term tradeline data will have information on whether or not the consumer has taken out or paid off any short-term loans. Paying off short-term loans correlates with reduced risk. Specifically, borrowers with three or more paid off short-term loans in the prior year have a 33% lower than average auto loan bad rate – an improvement three times as large!

This information of a lower default rate translates directly into pricing power and the ability for dealers to close more sales.

automotive-personel-200x300Better buying experience
Lenders using alternative data have information enabling them to quickly verify information online, reducing some of the manual verification process. Such services include identity verification and information on the consumers’ stability that correlates directly with risk. Often lenders will access alternative data to verify income, employment and ACH events. When successfully implemented, these services make the funding process more cost-effective for the dealer.  As a result, the experience is also faster and more efficient for the buyer.

Alternative data providers have built a business around collecting unique quality data from a variety of less traditional sources.  The buzz is this data is quickly becoming more mainstream with auto lenders. When choosing a lender, find out if they are using alternative data, what types of data and how they are using the data to help them more accurately assess risk and price the loan.

Lenders leverage alternative data to take a “closer look” at prospects and build a win-win for the dealer and the consumer. Not only will it allow dealers to be more competitive, resulting in more sales, but it will also allow the consumer to be able to afford the vehicle their credit really deserves. By meeting their needs quickly the first time, this will undoubtedly bring about repeat business.  A true win-win-win for the dealer, the consumer and the lender.

Scott-BrackinScott Brackin is the automotive practice segment leader for FactorTrust. Scott has more than 24 factortrust-200x300years of experience in financial services, credit risk data, and technology. Since joining FactorTrust in 2013, he’s overseen the company’s rapid growth in the automotive segment as part of his vision to become the premier alternative credit reporting agency (CRA) and analytics business for the automotive finance industry.

Is your GPS Device Really 3G?

By Jeff Karg
factortrust-200x300With 2G GSM towers sun-setting on a weekly basis, coverage for GPS devices on the 2G network is shrinking in areas across the country. If you think this is simply a rumor, just Google “AT&T 2G” and take a look at the top results. On the AT&T website itself you’ll find the statement, “AT&T has announced plans to sunset its 2G network by approximately January 1, 2017. As AT&T progressively frees up valuable spectrum for its mobile broadband networks, we may conclude that some markets or territories may need to sunset 2G even sooner.”  1

We know that the carrier and its roaming partners has in fact sunset certain markets already and will continue to do so throughout the next 18 months.

automotive-personel-200x300While it is true that T-Mobile is going to continue supporting its 2G network longer than AT&T, the question is: after AT&T’s network is gone, what does the T-Mobile network look like without the ability to roam on AT&T?

Anyone who tells you that 2G is here to stay is, at best, basing their claim on a technicality; one which will not serve you well if you are outside of T-Mobile’s native coverage.

Moving to 3G
Although 2G is not gone yet, the prudent long-term plan is to move to a newer technology, like 3G.  Maybe you are already buying 3G…. or you think you are.

creditmailUnfortunately, many dealers and lenders in the market who thought they were buying 3G GPS devices are actually still, unknowingly, receiving 2G devices. Whether it is a misunderstanding or something more deliberate, many customers of GPS devices have come forward indicating they thought they were buying 3G, when in fact they were not. Consequently, you may want to check the GPS devices you are currently ordering to make sure you are really on the 3G network. By putting it off, you may find yourself in the dark, at a time you least expect, nor can afford. 

It may not be easy to determine which device you are using by just looking at it. However, your device provider should be able to match the model of the device in your hand to certifications that show the device is utilizing 3G technology. This documentation is readily available to your device provider and can easily be given to you. If your device provider is reluctant to supply you with this documentation, there may be a reason.

PassTime, a leading provider of GPS devices is a Verizon Partner Program Member for its GPS devices in the BHPH and sub-prime lending spacing. Its devices utilize Verizon’s 3G network. Documentation of certification of its devices on Verizon and 3G are available upon request.

Should you have any concerns or questions about your device, contact PassTime at 877-727-7846 or

Jeff-Karg-HeadshotpasstimeJeff Karg is the Director, Corporate Communication, at PassTime.

Pull the Trigger to Higher Sales

by Denny Long
passtimeI have heard a story about a dealer in the ‘60s or ‘70s who would perch on top of his dealership with high-powered binoculars recording the license plate numbers of vehicles that were shopping at his competitor’s stores. Back then in his state, you could buy a list of the license plate numbers and learn the name and address of each registered vehicle. He would then grab the phone book and call these consumers to let them know that he offers better deals, better vehicles, and better financing. This dealer became very successful and a true legend in the car business. Could you imagine doing that in today’s world?
Well, in reality, you can! And you don’t need to perch on top of your dealership or use high-powered binoculars. And it’s perfectly legal – it’s even encouraged as a benefit to consumers.

factortrust-200x300We know that all dealerships are not created equal when it comes to helping consumers with sub-prime credit. Most dealers don’t have the lenders, inventory, or knowledge to help these people. We also know that every day, sub-prime consumers walk into the wrong dealership and are told they have bad credit and cannot be helped. Many of these consumers believe that they will hear the same thing from every dealer so their search for a vehicle ends. If you are the dealer in your market that has the right stuff for these sub-prime consumers, you’re in luck. Can you imagine knowing when every sub-prime consumer in your market has their credit bureau report viewed by an auto dealer, bank, lender, or credit union for automotive financing purposes? It is possible!

It’s called a Trigger Program because when the consumer has their credit bureau pulled, it will trigger a notification that this consumer is in the market. Every morning a fresh list of these shoppers becomes available. This is the most targeted list of in-the-market consumers available and the response rates prove it. As most of you know, you are lucky to get a 1.0% response rate on a typical direct mail promotion. It’s not unusual to see response rates from a proper Trigger Program run between 5.0% and 12.0%. It takes the right program with the right processes to get response rates like this.

automotive-personel-200x300Many of these consumers also have listed phone numbers that are not on the National Do Not Call List. These consumers can be called by a professional call center, which means you are communicating with them the day after they shopped and were possibly told “no” to financing. When these consumers receive a call telling them, “Congratulations, you’ve been pre-qualified for automotive financing at a dealership near you,” the consumer thinks, “These idiots don’t know I was just turned down yesterday.” So many say, “Yes, I want to hear more about this offer.”

Another key is that the mail must go out every day. You can’t wait and mail these people weekly. First class postage is also a must to get the mail in their hands as quickly as possible. These are valuable prospects so the mail piece should be high-quality and high-impact.

If you use the right provider for your Trigger Program, all of this is handled for you. You just handle the leads as they come in and do what you do best – sell vehicles! A properly handled Trigger Program always delivers results. As one of my clients stated, “This is the second best lead you can get with the first being a customer that’s already in your dealership.”

So now that you know that this great program is available, it’s time for you to pull the trigger to higher sales. Good luck and good selling!




denny-longDenny Long is president of Credit Mail Experts. creditmailHe has over 30 years of experience in the automotive industry and is known as the top expert in sub-prime marketing. Denny has written hundreds of helpful articles that have been published in World of Special Finance, Auto Dealer Monthly, and the BHPH Report.

Revisiting the Definition of ‘Micro-management’ with Today’s Sales Representatives

Alternative Data and Buy-Here, Pay-Here

6 Elements of a Successful Direct Mail Campaign

by Denny Long

We’re all looking for an advertising campaign that just sells vehicles with little or no work.  Unfortunately, it’s unlikely you’ll ever find that program.  It’s a lot of work to convert Special Finance or Buy-Here, Pay-Here leads into sales.  But if you really focus on the individual elements of the lead conversion process using pig-headed discipline, you can make it seem easy.  Let’s look at the 6 elements and how, with a little focus on each, you can greatly increase your return on investment.

Response Rate – There are many factors that come into play when it comes to response rate.  Target audience, offer, timing, and competition are some of the main factors.  What you do to get response will also affect the other elements.  For example, if you offer gifts or a chance to win a prize, you may increase response, but you’ll greatly decrease the closing ratio.  There are many documented cases where dealers have tried deception to get response.  This is not a good idea since it will lead to fines and lawsuits (see Tom Hudson’s recent articles in this magazine for an idea of what this can cost you).  Worst of all it will lead to a bad reputation for your dealership which will have a negative affect on all of you advertising.  I have a nice collection of articles about dealers receiving fines well over $200,000.00 because they thought they could get away with deceptive advertising – DON’T DO IT!  Target the right prospects with the right offer and you’ll get a good response.  I’ve seen BHPH promotions get a 10% response rate without gifts or giveaways.  Special Finance dealers can do very well also.

Contact Ratio – This is the percentage of the leads received that someone actually talked to about an appointment.  This is where the work starts.  I can’t tell you how many stories I’ve heard about a dealer getting a great response, but not selling any vehicles because the salespeople didn’t contact any of the leads.  You pay good money to generate leads so don’t let anyone drop the ball on this.  Call early and often until you contact the prospect.  If you really want to increase your contact ratio, have your calls answered live and go for the appointment right away.

Appointment Ratio – How many of those you talked to say yes to an appointment?  Again, this is an important number and should be tracked.  Make sure you create a script that everyone uses to ask for the appointment.  This is where great training and discipline really make a difference.  You should roll play with your scripts until they are perfect.  Remember, practice doesn’t make perfect, perfect practice makes perfect.

Show Ratio – How many of your appointments actually made it to the dealership?  If you did a great job setting the appointment, you should do well here.  This is an area where it is OK to offer an incentive for keeping their appointment.  It will be well worth offering a $10.00 gas card just for coming in.  You should make a confirmation call before the appointed time and a follow up call immediately if the appointment is missed to go for a reschedule.  It’s unlikely you’ll sell any cars to people that don’t show, so do everything you can to get them to show.

Closing Ratio – I’m sure your already pretty good at this since you do it every day.  Obviously this is an area that should be tracked and trained on regardless of what advertising source generated the lead.  It’s all about having the right mix of vehicles and lenders, but most of all having the desire and ability to close sales.

Gross Per Sales – This element proves that each of these elements contain its own group of elements.  Did you buy the right cars for the right price?  Do you have the right systems to match the buyer with the right vehicle and the right lender?  We’ve seen many dealers raise their gross per copy by over $1,000.00 just by using software that handles the matching process of hundreds of vehicles in a matter of seconds.

What an Increase in Each Element Means to the Bottom Line – Improvement in any of these areas will trickle down to an improvement to your return on investment.  After all, advertising should be viewed as an investment and not as an expense.  Many dealerships have made the mistake of cutting this investment like it was an expense during the current economic downturn.  Many of those dealerships that make that mistake won’t be around for the economic upturn.  Enough about me philosophies of advertising, let’s get back to improving on your advertising investment.

The chart below starts of what many may consider as average performance for each of the elements, but I believe there’s room for improvement.  We start with a 1.00% response rate, a 60% contact ratio, a 50% appointment ratio, a 50% show ratio, a 50% closing ratio, and an average of $3,000 gross per copy.  What’s really interesting is that if you improve any of the elements by 25%, the bottom line results are the same.  You start of with a 281.25% return on investment that gets increase to 351.56% return on investment.  Either way, it’s a lot more return than you’ll get with any bank account.  But if you increase all six elements by 25%, you increase your return on investment to 1,072.88%.  Let’s convert that to what really matters – MONEY!  You start off with a total gross profit of $22,500 and increase that number to $85,830.69.  WOW!


It’s plain to see that focusing on improvement of any and all of these essential elements will greatly increase your return on investment.  This means that the training and discipline it takes to make these improvements will have a huge return on investment.  Here’s the really big bonus – you can apply what you learn working on improving direct mail results to all of your lead generation investments, like Internet Leads and television leads.  Good Luck and Good Selling!

Denny Long is President of Credit Mail Experts. He has over 30 years of experience in the automotive industry and is known as the top expert in sub-prime marketing. In those years Denny has written hundreds of helpful articles that have been published in World of Special Finance, Auto Dealer Monthly, and the BHPH Report.

10 Ways to Increase Sales

by Denny Long

First, I wish all of you a Happy and Prosperous New Year.  Now, I don’t want to start a controversy about whether or not money can buy happiness, but I’m sure if you were able to increase sales you’d be a little happier.  So, let’s get to it with a plethora of methods to increase sales.  Not in any certain order so that you can mix and match the ones the suit you best or, what the heck, just put all 10 to work for your dealership.  Some of these ideas I have expanded on in past articles, others I will expand on in future articles.

Add More Employees to Your Department – Ouch…Few of us like the thought of adding the “expense and headache” of more employees.  Let me tell you from personal experience, you can’t do it all on your own.  Our sales were up in over 600% in 2006 compared to 2005 in large part due to the fact that we added enough employees to handle the amount of business we wanted to generate.  You most likely spend a considerable amount of money purchasing or generating leads.  Many of these leads will go to waste because you don’t have the staff to handle them.  Consider a BDC person or persons to work your leads, a funding clerk, and additional salespeople.  Walmart didn’t become the largest company in the world without adding employees – they have almost 2 million now and sales are through the roof!

Train and Motivate – Properly trained employees are exponentially more effective that untrained employees.  Your investment in training also tells the employee that they have a future with your company and in return motivates them to do a better job for you.

Maximize the Use of Available Technology – There are many software products available today that will make each and every employee more effective.  You wouldn’t have tried to run your dealership 15 years ago without a fax machine, why run it today without the right tools?

Purchase More Leads – This sounds like a no-brainer, but it’s amazing how many times I hear from a Special Finance Manager that management wants him or her to double sales without an increased advertising budget.  Nice dream, but it’s probably not going to happen.

Purchase Better Leads – There is a difference between types of leads.  You will find that you will deliver as little as 3% of some leads and as much as 30% or more for other types.  That means that you will spend ten times as much effort to sell one vehicle.  Spend your money wisely!

Get the Most from Your Current Leads – This goes back to the first few items mentioned.  You most likely need more people, better trained people, and/or better technology to maximize results from every lead you purchase.  There is a good chance your leads are being “cherry picked” and not fully utilized.  This is one of the first problems I find when helping dealers increase sales.  Inspect what you expect and know the status of every lead.

Expand the Range of Prospects You Can Deliver –If you were to follow up with every prospect you “weren’t able” to deliver, you will find that many of those prospects were able to buy a vehicle at another dealership.  You need to make sure you have a wide variety of Special Finance vehicles to meet the needs of your market.  You should also do a revue to make sure you have the right lenders to cover the spectrum of prospects in our market.  You don’t see that many people walking to work, so they must be buying vehicles somewhere.  Make sure it’s from you!

Work Your References – I’ve said this many times before, Birds of a Feather Flock Together.  There’s a good chance that many of the references you are required to get with every application are prospects.  Put together a marketing program to go after that business.  It may be the least expensive and most effective program you utilize.
Ask for Referrals – If you don’t ask for the sale, it’s unlikely that you’ll get it.  The same goes for referrals.  You just placed someone in a vehicle that didn’t think they could get a vehicle.  They are probably very happy with you and will be glad to tell you about their friend that needs your help, but you have to ask!

Maximize Your Location – I’ll bet there is a considerable amount of traffic that drives past your dealership every day.  Do they all know that you are the best in town at helping those with less than perfect credit?  A few signs out there would help.  Again, this is a very inexpensive way to increase sales.  You do need to be careful about your wording.  You don’t want to scare away your prime prospects into thinking you’re only there to help those with bad credit.  I won’t mention any names, but at least one of the lenders offers signage that gets the point across without alienating your prime customers.

As you know, the automotive business is going through some rough times, but a properly prepared Special Finance Department will always be profitable.  So pick one, a few, or all of them and get on your way to a very prosperous new year.  Good Luck and Good Selling!

Denny Long is President of Credit Mail Experts. He has over 30 years of experience in the automotive industry and is known as the top expert in sub-prime marketing. In those years Denny has written hundreds of helpful articles that have been published in World of Special Finance, Auto Dealer Monthly, and the BHPH Report.