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