The Key to Approvable Deal Structures in SF How to Structure for Maximum Profits!

Transcription

1 The Key to Approvable Deal Structures in SF How to Structure for Maximum Profits!

2 4 Keys to Win-Win-Win Deals Correct vehicle (Inventory) Optimum deal structure. Get vehicle gross first. Maximize back end call. Down payment. (It all goes to gross profit!) Rehash with finance company.

3 Make it Appealing Stop turn downs before they happen Finance companies want to approve deals Proper PTI and LTV is critical With the right car and the right structure, everybody wins!

4 Approvals Finance company buyers look for reasons to turn down a deal. Finance company buyers get paid to buy deals. They want to make it happen

5 PTI and LTV Proper vehicle selection will allow you to submit deals in the 12-15% PTI range. Start all deals below a 620 beacon at 99% of LTV or less. Get the customer on the approval grid first.

6 Turn Downs Dealers submit bad structures daily. Effectively creating their own turn downs. If a customer has a $1,500 per month income and the deal structure calculates a $350 payment, your already dead in the water.

7 Let s Structure a Deal! Customer makes $1,850 per month She qualifies for a max PTI of 20% $370 Her credit score is 525

8 Start with a Dummy Deal! Stock No. Year Make Model Mileage Cost Average Trade Average Loan SF Saturn Ion 63,000 8,300 9,000 8,300 SF Ford Focus 48,750 9,800 11,000 10,000 SF Chevy HHR 29,300 8,800 10,000 9,200 SF Ford Explorer 47,000 9,900 11,000 10,000 SF Chevy Malibu 23,000 11,700 13,500 12,000 SF Ford Taurus 19,000 12,000 13,500 11,500 SF Jeep Grand Cherokee 61,000 12,500 13,500 11,500 SF Chevy Silverado 60,500 13,200 13,000 11,000 SF Chevy Colorado 28,000 14,500 13,000 10,500 SF Honda Civic 36,000 14,500 13,800 10,700 SF Mercury Monterey 51,000 13,500 14,000 12,750 SF Chevy Trailblazer 49,600 15,500 17,000 15,000 SF Suzuki Grand Vitara 46,000 12,800 14,500 13,000 SF Toyota Camry LE 33,000 14,500 13,500 12,000

9 For the Love of Imports! 2009 Honda Civic 36,000 miles NADA Trade is $13,000 Structure deal at < 99% LTV which equates to a payment of approx $325 with $500 down.

10 For the Love of Imports! There are two parts of the finance equation the customer the vehicle You just eliminated #2 which gets the finance company excited about #1

11 Rehash Now that you have the customer approved in the system with a solid deal structure, go back to the lender and start over. Switch cars and structure to fit gross profit needs while matching the lender s advance policies.

12 Your Inventory Stock No. Year Make Model Mileage Cost Average Trade Average Loan SF Saturn Ion 63,000 8,300 9,000 8,300 SF Ford Focus 48,750 9,800 11,000 10,000 SF Chevy HHR 29,300 8,800 10,000 9,200 SF Ford Explorer 47,000 9,900 11,000 10,000 SF Chevy Malibu 23,000 11,700 13,500 12,000 SF Ford Taurus 19,000 12,000 13,500 11,500 SF Jeep Grand Cherokee 61,000 12,500 13,500 11,500 SF Chevy Silverado 60,500 13,200 13,000 11,000 SF Chevy Colorado 28,000 14,500 13,000 10,500 SF Honda Civic 36,000 14,500 13,800 10,700 SF Mercury Monterey 51,000 13,500 14,000 12,750 SF Chevy Trailblazer 49,600 15,500 17,000 15,000 SF Suzuki Grand Vitara 46,000 12,800 14,500 13,000 SF Toyota Camry LE 33,000 14,500 13,500 12,000

13 Questions to be Answered Does the customer qualify for the finance company? What payment can the customer qualify for? What is the most you can finance on the vehicle? The whole deal? Do you have a car deal? What is the front end gross profit? Back? Total?

14 Structuring the Deal Payment? Payment to income = 20% $1,850 mo. X 20% = $ per month

15 Inventory Stock No. Year Make Model Mileage Cost Average Trade Average Loan SF Saturn Ion 63,000 8,300 9,000 8,300 SF Ford Focus 48,750 9,800 11,000 10,000 SF Chevy HHR 29,300 8,800 10,000 9,200 SF Ford Explorer 47,000 9,900 11,000 10,000 SF Chevy Malibu 23,000 11,700 13,500 12,000 SF Ford Taurus 19,000 12,000 13,500 11,500 SF Jeep Grand Cherokee 61,000 12,500 13,500 11,500 SF Chevy Silverado 60,500 13,200 13,000 11,000 SF Chevy Colorado 28,000 14,500 13,000 10,500 SF Honda Civic 36,000 14,500 13,800 10,700 SF Mercury Monterey 51,000 13,500 14,000 12,750 SF Chevy Trailblazer 49,600 15,500 17,000 15,000 SF Suzuki Grand Vitara 46,000 12,800 14,500 13,000 SF Toyota Camry LE 33,000 14,500 13,500 12,000

16 Structuring the Deal with BFF Payment? Payment to income = 20% $1,850 mo X 20% = $370 per month Max Deal Potential Vehicle Total Deal Avg Trade $11,000 $11,000 X 110% X 135% $12,100 $14,850 MTF is $14,800 Pmt. Factor $ $ % PTI

17 Structuring the Deal - Is There a Deal? Payment? PTI = 20% $1,850 mo X 20% = $ Max Payment $ Pmt. factor Max to finance $14,800 Need to finance $14,800

18 What it Looks Iike Payment? PTI = 20% $1,850 mo X 20% = $370.00/mo. Max to finance $ 14,800 SF 1004 Avg. Trade $ 11, % of Avg. Trade $ 12,100 (max veh. amt. fin.) Add cash down $ 1,000 Max sale price $ 13,100 Subtract tax & fees ($ 1500) Net funds rec d $ 11,600 Cost of SF1002 $ 9,900 Deal? $ 1,700 (135% of NADA = $14,800 Available Back End $ 2,700 max amt. financed) Subtract SC Cost ($ 1,000) VSC Profit $ 1,700 = $3,400 Total Deal!

19 Do You Have Low F&I Gross Profits in SF? Generally caused by selling to much vehicle, not leaving ability to squeeze F&I products inside required payment or LTV. Take one step down in vehicle price allows you to add in F&I products and gross profit WITHOUT SACRIFICING FRONT END GROSS.

20 4 Keys to Win-Win-Win Deals Correct vehicle (Inventory) Optimum deal structure. Get vehicle gross first. Maximize back end call. Down payment. (It all goes to gross profit!) Rehash with finance company.

21 Thank You Contact information