Deal Strategy
How Dealerships Can Improve Auto Loan Approval Rates
Improving approval rates doesn't always require more traffic. Often it requires doing more with the applications you already have.
Many dealerships assume that low approval rates are simply a function of the credit quality of their customer base. In reality, approval rates are heavily influenced by things the dealership controls: deal structure, lender selection, the customer interview process, stipulation management, and the skills of the people working the deals. Here are the most impactful strategies for improving approval rates.
Improve Deal Structure
Most declined deals can be traced back to a deal structure problem. The vehicle, down payment, advance, and term need to align with what the lender's program allows for that specific credit profile. Understanding how to structure deals for approvability, not just for gross, is one of the highest-impact skills in special finance.
Match Credit Profiles to the Right Lender
Different lenders have different appetites for different types of credit. Submitting a deal to the wrong lender wastes time and can hurt the customer's chances with the right one. Developing a clear understanding of each lender's program and which credit profiles they're designed for is essential.
Strengthen the Customer Interview Process
The customer interview is where you surface the information that makes deals approvable, or identifies the issues that will kill them before they get to the lender. A strong interview process helps you structure better deals, anticipate stipulations, and avoid surprises.
Manage Stipulations Proactively
Stipulations are conditions the lender places on an approval. Deals fall apart when stips aren't managed proactively, when the dealership doesn't know what to expect, doesn't communicate clearly with the customer, or doesn't have a process for getting stips resolved quickly.
Evaluate and Improve Your Lender Mix
If the dealership is consistently struggling to get certain types of credit approved, the issue may be a gap in lender coverage. Evaluating the current lender mix, identifying gaps, and developing a stronger strategy around the credit profiles you actually see can open up approval opportunities that aren't currently available.
Train the Team to See More in Every Application
Approval rates improve when the people working the deals have the skills to identify approval opportunities that aren't obvious. Special finance training helps teams read applications the way lenders read them, and find the paths to approval that others miss.
"The opportunity to improve approval rates is usually already inside the dealership. It's in the applications being received every month, and in the skills and process used to work them."
Let's Find the Opportunities in Your Operation
Auto Finance Magician helps dealerships identify where approvals are being lost and build a strategy to capture more of them.