More F&I Lessons:
Hello and welcome to this lesson on structuring deals. deal structure is a very important aspect of f&i. a poor deal structure may mean the difference between delivering the customer and having them leave for another dealership. first let’s start with the little sample problem. you have a customer with a 590 credit
Score 2,000 per month in income and $500 per month in revolving debt. look at the chart on your screen. determine which would be the proper vehicle choice for this customer. okay that was a bit of a trick question. the truth is you don’t have enough information to gave you about the customer. what was their
Biggest issue? debt, credit score or budget? the customers largest issue is budgeting. they earn $2,000 per month in income and have $500 per month in revolving debt. that doesn’t leave much room left over for housing, groceries, bills and then also a vehicle. in order to qualify for a loan, budget-friendly car. the year,
Mileage and ltv are not the issues. so how do we find the right vehicle and structure for this customer? in this case we can ask our lenders for a payment call. a payment call is a way for a lender to provide you with the exact payment and interest rate that they’ll need to approve the deal. okay let’s try a
Payment call and the lender gave you terms of $299 per month and a 15% interest rate. now it’s selling price and ltv. using your dms software, you can plug in the numbers that you already know such as the 15% interest rate and the customers down payment of $500. next you could begin to play with the selling price in your
Dms software until you find the payment that is all-inclusive at $299 per month. looks like a selling price of $11,975 puts us at that magic $299 number. going back to our worksheet, we now know that we need to find a vehicle with the maximum selling price of $11,975. next we can now use the lenders rate sheet to find
Our maximum ltv. because our maximum selling price is capped, we need to limit our vehicle selection to cars that are at least a few model years old because these are the ones that are priced under $12,000. using our lender guidelines sheet, we see that this lender caps ltv at 110% for vehicles that are three model years
Old or older. therefore we now know that this customer needs a vehicle with a maximum sell price of $11,975 and a maximum ltv of a 110%. but vehicle selection is not the only form of deal structuring. you also must be knowledgeable in optimizing approvals. this is done by knowing each lenders guidelines and
Knowing which lenders like trades to be a part of the deal in addition to cash down. santander for example is notorious for liking trade-ins as part of a deal. you must also know which lenders accept which lenders accept bank statements as poi (proof of income) and which banks require w-2’s. lastly, co-application deal
And which lenders care about such ordering. each of these are factors in overall deal structuring and will be heavily dependent on which lenders your dealership is signed up with. it’s important to memorize…..
Transcribed from video
Structuring Deals as an F&I Manager | Free F&I Training By Finance Manager Training
