The top 5 pitfalls to avoid when submitting deal packages to SC

Tax season sizzles for most dealerships.

That means getting through the funding process is going to be extremely important to keep business flowing smoothly through March and April.

Santander Consumer USA (SC) will be working hard to manage the flow of tens of thousands of contracts from dealers that will be needed to finance new and used vehicles during these busy months.

The goal at SC is to have complete contract packages funded within 24 hours. Yet, with so many contracts there are bound to be small hiccups here and there.

For example, calling about a contract before 48 hours has passed – 72 hours in the case of tax season – actually slows processing of contracts to all dealers, and will not move the caller’s funding package ahead of others that have been in house longer.

Otherwise, here are the top five pitfalls some dealerships encounter – and you can avoid – when submitting deals to SC funding that can slow down the process:

We can’t get in touch with the applicant

When funding receives a deal, chances are that some information will need to be verified before the deal is given the green light. If funding doesn’t have the correct contact information for your customer, the deal can’t be finalized. It’s critical that phone numbers and/or contact people are correct so that funding can reach them if necessary.

Submitting incomplete contract packages

Our funding team can’t complete your deals until all of the documents in the package are received. By using SC’s funding checklist, it’s easier to ensure your funding package is complete.

The approval terms don’t match the contract

If multiple approvals have been received for the same customer, double-check your documents to make sure the correct approval sheet is attached to the contract package. In addition, check with your buyer before making changes to the approval terms. These two steps can save a significant amount of time and confusion once the package hits funding.

Income is not verifiable

Reviewing the customer’s paystub prior to completing and submitting an application can save time down the road. A lot of customers will provide their net income versus gross, and some just take a wild guess when completing a credit application. Request a check stub from your customer, and review it with them to ensure the proper monthly income is entered on the application.

Vehicle value does not match the value on the approval

If a customer changes his/her mind about which vehicle to purchase, it’s critical to update the vehicle with your buyer. Send an update via Dealertrack or RouteOne alerting your buyer to the change, and get an updated approval so there won’t be issues that delay your funding. You also have the option of updating the vehicle in our Rehash Tool. Just log in to the Dealer Extranet to update your structure for a quick look at what the changes will mean.

Tax season presents a wealth of opportunities to boost your bottom line to the top of the charts. So don’t let small pitfalls keep your dealership from achieving your goals.

If you have questions, contact SC funding from 8 a.m. to 7 p.m. CT, Monday through Friday, at funding@santanderconsumerusa.com or 800-877-4696.

 

020719 IL Putting a premium on accurate paperwork can help deals flow smoothly (2)

How to change the odds in your favor against application fraud

When the numbers just don’t add up …

It could be an honest mistake or a misunderstanding.

Or it could be fraud, specifically, application misrepresentation, according to a dealer brochure developed by the Enterprise Fraud Management team at Santander Consumer USA.

A good time to figure that out is when the customer applying for financing is sitting right in front of you.

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PART 3

“Only about 15 percent of auto loan fraud is identity theft,” wrote a fraud strategist from PointPredictive consulting firm. “So if your only fraud control is checking a driver’s license or Social Security card, then you are really only addressing a small fraction of the risk.”

The risk with every auto finance application also includes:

  • Income fraud in which a borrower lies about his/her income.
  • Employment fraud in which the borrower lies about employment, work history or job title.
  • Document fraud in which a borrower falsifies pay stubs to substantiate income claims.

RELATED

PART 1: What you need to know about fraud risk – and why you should care

PART 2: Identity fraud can take ‘enormous toll’ on your dealership profits

And the more finance applications your dealership submits, the greater your chances of falling victim – unless you take (or have taken) steps to change the odds in your favor, of course.

SC’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests what to look for and how to reduce application misrepresentation risk at your dealership:

The Red Flags

  • Income inconsistent with local salary rate.
  • Business revenue inconsistent with personal or self-employed income.
  • Income that seems inappropriate for the applicant’s age or the employer.
  • Non-existent employer, unfamiliar employer name or no longer employed.
  • Address is a P.O. box, drop box or mail forwarding address.

“It’s quite common for employment information to be fabricated during the auto-lending process,” cautioned the PointPredictive consultant.

And the Checklist

  • Pay attention to buyer behavior, such as nervousness or indirectness in answering questions.
  • Pay attention to application details by comparing application information to the credit bureau report – do the trade lines seem appropriate with the applicant’s stated income and position?
  • Ask for income verification via pay stubs – make sure they’re genuine – or other documentation. Call employer phone number and contact references.

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud … in the retail auto space,” says the company. “[And] watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

Customer loyalty climbs to record level with small uptick in 2018

Brand loyalty is stronger than ever among vehicle buyers.

Sounds like good news.

But that result comes with a cautionary note from IHS Market research firm in a press release announcing its 2019 loyalty award winners.

With about 17.6 million new vehicle registrations during the 2018 model year, 53.7 percent of customers – or about 9.5 million – returned to market to purchase or lease another vehicle from the same make they already owned, according to the research firm.

The GMC Yukon Denali helped General Motors to the mountaintop.

The GMC Yukon Denali helped General Motors to the mountaintop.

“While this represents a record loyalty rate, the increase was just one-tenth of a percentage point from last year, demonstrating a flattening of loyalty rates in the industry after years of increases … [and] competition is stronger than ever at the top,” the research firm reported.

So where is the top of the loyalty mountain?

Among the overall winners were General Motors, top manufacturer; Ford, top make; Jeep, highest conquest percentage; Lincoln, dealer loyalty, and Tesla, most-improved loyalty to make and most-improved conquest percent, with GM, Ford and Jeep all repeating 2017 model-year wins.

GM and Jeep also scored four-peats, while Ford’s streak reached nine years, with about two-thirds of GM and Ford owners having remained loyal to their brands when buying or leasing in 2018.

Also notable in brand results is Toyota’s strength in ethnic markets, leading that category overall, as well as Hispanic, Asian and African American markets individually.

When it comes to customer loyalty, IHS recognized 24 models – mainstream and luxury – with its 2019 awards, which are based on 2018 model-year sales. From the “traditional” subcompact Mini Countryman to the full-size luxury Lincoln Navigator sport utility vehicle, these 2018 models demonstrated “superior customer retention and conquest.”

Mainstream brands with most segment wins are Toyota with three and Ford, Honda and Jeep, two each, while luxury brands Lexus earned four segment wins and Lincoln three, according to the research firm.

This year’s segment winners by category are:

Mainstream vehicles

Chevrolet Equinox, compact crossover utility vehicle (CUV)

Subaru Outback, midsize CUV

Jeep Wrangler, compact sport utility vehicle (SUV)

Jeep Grand Cherokee, midsize SUV

GMC Yukon Denali XL, full-size SUV

Toyota Tacoma, midsize pickup

Ram 1500, full-size half-ton pickup

Ford F-Series, full-size three-quarter to one-ton pickup

Honda Odyssey, midsize van

Mini Countryman, traditional subcompact car

Honda Civic, traditional compact car

Toyota Camry, traditional midsize car

Toyota Avalon, traditional full-size car

Volkswagen GTI, sports car

Ford Mustang, midsize sports car

Luxury vehicles

Lincoln MKC, compact CUV

Lexus RX, midsize CUV

Lexus GX, midsize SUV

Lincoln Navigator, full-size SUV

BMW i3, traditional subcompact car

Lincoln MKZ, traditional compact car

Lexus ES, traditional midsize car

Lexus LS, traditional full-size car

Porsche 911, sports car

Of course, the market research firm had its take on what’s important going forward for an industry facing several potential challenges in 2019, including lower demand.

“As the market plateaus, insight from advanced analytics will enable OEMs and their dealers to engage with consumers more efficiently and effectively through a better understanding of consumer buying behavior,” said Kristen Balasia, a vice president at IHS Markit.

The loyalty awards program is meant to “showcase the achievements of the automakers, brands and their dealer networks to win back and conquest customers during such a competitive sales environment,” said Steve Had, IHS’ vice president of automotive product solutions. “[And] recognize these industry leaders that are working to improve their loyalty efforts year over year.”

Identity fraud can take ‘enormous toll’ on your dealership profits

There’s not much question that identity fraud is an important issue for businesses, including automotive dealerships.

Last year alone, nearly 10,000 reports of identity fraud related to auto financing and leasing were compiled by the Federal Trade Commission, or one for every 3.7 dealerships in the United States, and a 43 percent increase over the previous year.

But with odds of only one in four, why should you worry about identity fraud?

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PART 2

“You should be concerned with fraud because of the hit your profits can take,” wrote Frank McKenna of PointPredictive consulting firm in a recent Digital Dealer Magazine report. “Car dealerships that have had a problem with fraud in the past report that it can take an enormous toll on their profits.”

McKenna wrote that it can take the profit of 10 good loans to recover the cost of one fraudulent loan. Although that figure could be even higher based on average cost data – around $25,000 per vehicle – from the U.S. Bureau of Economic Analysis and average gross profit data – ranging from $2,000 to $2,500 – from the National Automobile Dealers Association (NADA).

RELATED

Part 1: What you need to know about fraud risk – and why you should care

And the more finance applications your dealership submits, the greater your chances of falling victim – unless you take (or have taken) steps to change the odds in your favor, of course.

Santander Consumer USA’s Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs suggests what to look for and how to reduce identity fraud risk at your dealership:

The Red Flags

  • Consumer or service member alerts on credit report.
  • Social Security number (SSN) issued within the last five years.
  • Recently opened trade lines, thin file or credit history, and a high number of inquiries in the recent past with no new accounts opened.
  • Applicant is listed as an Authorized User – Not the Primary Account holder on multiple accounts. Fewer than 3 primary accounts.
  • Discrepancies and/or inconsistencies between a credit application and credit bureau report.

And the Checklist

  • Examine and thoroughly review government identification for any suspicious conditions – tilted font lines or evidence of physical damage on a driver’s license or state ID, for example – and match the SSN to first and last name on the driver’s license or state ID.
  • Match government identification to details on the credit bureau report.
  • Ask dynamic, knowledge-based questions about specific trade lines from the credit bureau, such as “Who financed your last vehicle?” and “What is the payment amount?” This may help us confirm we are speaking to the actual applicant.
  • Compare the customer personal attributes to the credit bureau report – does the age seem appropriate to the person with whom you are speaking, for example.

“Santander Consumer USA (SC) is committed to working with dealers to raise awareness of fraud and elder-abuse risks in the retail auto space,” says the brochure, Driving a New Model, which was created by SC’s fraud management group. “[And] watching for red flags is the most cost-effective way of preventing fraud and reducing expenses related to fraud, reputation, regulatory and financial risks.”

This series, Driving a New Model, is aimed at helping dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

What you need to know about fraud risk – and why you should care

It goes without saying (almost) that an auto lender such as Santander Consumer USA (SC) would be concerned about the threat from fraud.

Most auto dealers also would agree that it poses a risk to their businesses.

But few would suggest that fraud is as easy to identify and deal with as it is to acknowledge.

So why should you care if your dealership hasn’t had a problem? You’ve heard the old saying that “past performance is no guarantee of future results.” Well …

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PART 1

“The number of identity theft, fraud and elder-abuse complaints … has increased significantly, resulting in a push at all levels of government to regulate more closely auto lenders and dealers,” says an SC-produced brochure, Driving a New Model | A dealer guide to recognizing the warning signs of fraud, identifying suspicious buyers and taking action to reduce costs.

“Here in the U.S., fraud is on the rise in a big way,” wrote Frank McKenna of PointPredictive consulting firm in a separate Digital Dealer Magazine report 5 Reasons Car Dealers Should Be Concerned with Fraud. “Massive data breaches, like the Equifax breach, have given criminal fraudsters access to more information to defraud consumers and businesses. That is why we can expect more fraud perpetrated and more losses incurred than any other point in history.”

McKenna reported that “fraudulent applications could exceed $6 billion” this year, with one in every 200 applications containing information that could lead to a problem with the loan after funding.

Driving a New Model was produced to help dealers identify and take action against this threat.

“Awareness of fraud and elder-abuse red flags will allow you to take steps to reduce these risks and will result in a number of benefits,” according to the SC pamphlet.

Driving a New Model suggests those benefits could comprise:

  • Improvement in the overall customer experience
  • Reduction in consumer harm and risk to the dealer’s reputation
  • Reduction in credit stipulations on an application
  • Reduction in funding delays to dealership
  • Reduction in post-funding disputes and potential unwinds

Our upcoming series, Driving a New Model, will help dealers spot the red flags for identity fraud, application misrepresentation, straw buyers and elder abuse, and includes actionable checklists.

“Establishing a partnership with lenders is the best way to fight fraud,” wrote McKenna. “Since lenders have more tools to diagnose and detect fraud, they can help you understand the impact to you before it ever happens. Good collaboration on fraud is the key to winning the war on fraud.”

U.S. vehicle sales beat expectations, cruise to a ‘very good year’

The experts didn’t see it coming.

New-car sales were supposed to drop in 2018, according to most analysts, with early predictions around 16.6 to 16.8 million compared to 17.2 million in 2017.

But dealers remained optimistic, based on results of a Cox Automotive survey.

“Although price pressures and costs are working against them, we continue to be encouraged by the fact that dealers are optimistic about market prospects,” said Jonathan Smoke, chief economist of Cox, to Autodealer Today magazine before the year even started.

2019 Nissan Kicks

So who had a better measure of the market?

It wasn’t until mid-year – when there were growing signs that 2018 vehicle sales actually could beat those early forecasts – that the experts conceded the year might turn out better than expected.

“At a glance, it appears that forecasts may have been slightly underestimated,” reported CBT Automotive Network in June. “Surprisingly positive results from most major automakers have helped keep the retail automotive industry from sounding the alarm in the first half of 2018.”

“But it’s much too early to celebrate,” cautioned CBT. “While 2018 started strong in auto sales, there’s a very strong possibility that sales will erode in the third and fourth quarters.”

Another good month

Then came June results as the fourth month of the first two quarters with a sales increase.

Not long after, Forbes reported that “despite generally good conditions, automakers are in for a rough finish to 2018,” based on an interview with a senior economist from Cox.

But the months of August and October also beat out 2017 results, and November sales brought the year to around 16 million, ahead of 2017, based on data from the automakers themselves and the U.S. Commerce Department’s Bureau of Economic Analysis (BEA).

And that set the stage for December, the strongest sales month every year since 2015.

Four-year win streak

Although December was only the third-best sales month this year – both March and May were higher – the total passed 17.2 million reported by the automakers in 2017 to 17.3 million. That makes 2018 the fourth consecutive year of more than 17 million in vehicle sales.

And, finally, the experts got it right. Well, sort of.

“There is no denying 2018 was a very good year for the U.S. auto industry,” said Charlie Chesbrough, senior economist, in Cox’s December forecast. “Many economic factors pointed to a slowdown in the second half of the year, but sales remained in high gear.”

Market uncertainty?

But in comments to Seeking Alpha, an Edmunds manager found a negative spin for the results.

“Automakers continue to rely heavily on upping fleet sales to mask eroding retail demand, and that’s not a sustainable place to be,” the Edmunds manager said. “A record number of lessees returning to the market should help give dealers a boost in the New Year, but rising interest rates and vehicle costs are going to continue to give car shoppers pause and create uncertainty in the market.”

Forecasts for 2019 now range from 16.5 million to about 17 million, according to a Bloomberg report, Don’t Be Fooled: The U.S. Auto Sales Party Is Coming to an End.

But that’s not very different from 2018, which turned out to be a pretty good year, after all.

You need the right game plan to score big this tax season

Tax season.

It’s like your bowl game after a successful 2018.

Most people equate taxes with the April filing deadline, but auto dealers like you know better.

A high proportion of tax refunds will have gotten to taxpayers by February or March, and those early filers tend to receive the largest checks.

That typically makes March one of the top three sales months of the year.

110618 IL Running the option is a smart way to score more customers

In fact, March is the top month of 2018, pending results for December, with nearly 1.7 million units sold. Almost 9 percent of 2017 sales occurred in March, the month before tax season ended!

That also means January is one of the most important months of the year, because that’s when dealerships need to game plan for the tax rush coming our way in February and March. It may be especially important this year, with industry analysts expecting sales to slip.

There’s a lot to be said for featuring the playbook that helped you to a winning 2018 season:

A high-powered, hurry-up offense to move the ball down the field (Santander Consumer program)

Running the option that provides a competitive advantage (Dealer Extranet and Rehash Tool)

Making the most of fourth-quarter trips to the red zone (Dealer Relationship Manager)

A wrinkle in your offense to throw competitors off balance (Direct Mail)

The X’s and O’s of the hurry-up offer a glimpse into what Santander Consumer USA brings to the game:

  • More financing options increasing your chances of scoring.
  • A pricing strategy calibrated to a dealer-favorable call.
  • Lower price and discount fee and a fresh approach to credit underwriting.
  • Flexibility on financing terms and increase dealer participation.
  • Most application responses received within seconds of submission reducing wait times.

“Long gone are the days when we looked at Santander only for the subprime customers,” said Carlos Pedre of AutoNation Chevrolet Doral in Florida. “Definitely a much larger credit spectrum lender now.”

“Santander Consumer USA has been a consistent lender – we count on them month in and month out,” said a finance manager at Greenwood Hubbard Chevrolet in Hubbard, OH. “Santander gives us an opportunity with almost any customer that walks through the door.”

That means you can count on SC to help you achieve results that show up on the tax-season scoreboard.

Contact SC online

Happy New Year!

123118 IL Happy New Year!

Hiring for keeps: A four-part survival guide for 2019 and beyond

It’s never a bad time to get better at hiring great people for your business.

Sales associates, service technicians, back-office staff, other team members, it doesn’t matter. Getting better at hiring great people for your business probably will reduce your costs and boost your results.

“It’s no secret that employee turnover rate for certain positions in the auto industry is high,” David Druzynski, chief people officer at Auto/Mate Dealership Systems, wrote in Dealer Solutions Magazine. “Auto dealers keep making the same hiring mistakes over and over.”

But avoiding those all-too-frequent mistakes is exactly what our series, “Hiring for Keeps,” is about. And not missing out on “one of the biggest sources of operational opportunity” in your business.

Here is a quick guide to the four-part series:

 

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Calculating the cost to your dealership of high employee turnover

Employee turnover is a burden, costing the average dealership more than $1.5 million a year in replacement costs alone. That doesn’t count the dollars associated with leads (or customers) burned by inexperienced employees. And the biggest hit comes with your sales team.

 

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Don’t rush to judgment when you’re hiring for keeps

Nine of your dealership’s sales consultants quit in the last year. Not only does that mean your dealership will spend more money than you would like on hiring, onboarding and training, but it creates continual pressure to find consultants so your team isn’t left shorthanded, costing you sales opportunities. And your hiring process may be exactly where the trouble starts.

 

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Swim, don’t sink: Best practices for onboarding new hires at your dealership

Does your dealership have the right stuff to onboard new hires successfully? It’s not as simple as just assigning your new hire a desk and starting with administrative paperwork. The idea is to get that new hire up and running – and producing – for your business. And that may mean doing things differently than many dealerships are accustomed to operating.

 

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Our new hire is on board, now what? Four keys to an engaged employee

There’s more to onboarding a new hire at your dealership than what happens between the hire date and start date. The onboarding process should engage employees early on and keep them interested in staying for the long haul and driving your dealership’s growth.

Two of three dealerships don’t give themselves much of a chance to find – and keep – great people, according to a study from Cox Automotive.

Hiring for keeps means getting better at both and reaping the benefits for your business.

Happy holidays!

Happy holidays