Subprime Auto Finance LTV Training – F&I School Lesson

An F&I Training lesson by

Subprime customers for a particular vehicle,   that doesn’t mean that they won’t finance them for  any vehicle. the lender may simply want less risk.   that’s where your ltv sheet comes into play. take  a quick look at your ltv sheet and find a vehicle   that has a higher acv then check with the lender  to see if this better ltv

Vehicle will turn their   decline or counter into an approval. how do you  build the ltv sheet? well popular dealership   softwares, one example would be vauto, do this  for you. they typically have a way to sort by   highest to lowest acv value, or your sales manager  may already keep such a list that you can use. if  

Your dealership does not have the software and  your sales manager does not keep such a list,   first thing you’ll see on this side is a  chart it’s going to list a stock number,   vehicle, your sale price & your book out. and   which can help you determine the ltv if you   we’re gonna put a stock number in let’s say 

It’s…it doesn’t matter what it is but let’s   say it’s a ford escape. let’s sell it for how  about $14,995. now we’ve got to get our book   out right? our book out goes right there. our book  out is the acv, the actual cash value of the car,   the market value of the vehicle okay? and the  way most dealerships get that, most

Banks prefer   you to get that is by using nada retail or loan  values. so we’re going to go over to dealertrack   which does all of our book outs for us. we’re  going to enter the options on the car. it has fog   lights, navigation, parking & keyless entry. or  to click “calculate” and it’s going to give us the  

Nada trade value, which is $12,300. so now that we  have that, we can go over & we can put our $12,300   right there. now our book outs already in there,  $12,300 and our amount financed. how do we get   our amount financed? now the number one mistake  students make with this ltv sheet is they assume   the sale price

Is the amount financed. that’s  two different things okay? but how do we get   our amount financed? well you’re going to use your  dealerships dms software, whatever it is. in this   case we’re going to be using dealertrack, okay?  let’s say our customer’s putting a $1,000  down. now after taxes and fees and so forth  

Their amount financed comes to $15,432. that’s  when you add $14,995, $1,199.50 for taxes,   $237.50 for fees and then you take away the $1,000  down you get $15,432 for your amount financed.   again your bookouts $12,300, your amount financed  $15,432 and your ltv calculation is 125%.   they include the sale price in here if

It’s not   included in the chart? why not just put the amount  well the answer is simple. because depending on  what the customer’s putting as a down payment,   example this customer had a $1500 trade with   this vehicle. now the amount financed is $13,812.  you have to go back over here…$13,812 and now   the ltv is

112%. it’s a big difference, it’s a  13% difference. so it wouldn’t make sense to put   the amount financed in this column because it’s  going to change for each and every customer. how   much money they’re putting down, whether there’s  a trade, whether there’s negative equity etc. so   the point of putting the sale price and

The book  prices, you can quickly see whether you’re going   $19,900 and the book is $20,100. so as long as   the customer is putting down enough money for  taxes and fees, you’re going to be under 100%   selling it for. so you already know that   as long as their income’s high enough,  the value of the car when they

Drive off a lot  is more than what they owe the bank. so if the   bank had to repossess it, if they had to take it  back, if it we’re to get into an accident, they’re   definitely going to get their money back okay?  you’re going to want to put cars  than you’re selling them or look  close to what you’re selling for. sell price

That’s pretty close especially   you’re gonna be almost even okay?  if you have any questions feel free to put  a comment down below and we will explain   this free ltv sheet right below this video.

Transcribed from video
Subprime Auto Finance LTV Training – F&I School Lesson By Finance Manager Training