Every year, hurricanes hit our coasts. Our forests catch fire. Tornadoes decimate towns. Natural disasters happen. What happens in their wake is up to us. It’s amazing to see how people band together in the recovery effort after a natural disaster. People open up their homes. Companies donate millions of dollars to relief efforts. Local businesses offer free food and accommodations. In auto finance, lenders also have an opportunity to aide those people and dealerships affected by natural disasters and build lasting relationships.
Due to slow sales growth and an influx of off-lease inventory — and a disconnect between car manufacturers and consumers — dealers had an excess of inventory for both new and used vehicles through the first half of the year. August showed a slight uptick and the typical September sell-off appears to be going well. Industry analysts are already predicting high fourth-quarter sales volumes in the areas most affected by Hurricanes Harvey and Irma. As a lender, it’s important to work with your dealers to get a current snapshot of on-lot inventory, as well as lease volume that might expire at the end of the year. What types of vehicles are available? What are the regional price points — and degree of margin pressure?
Be mindful of pre-owned vehicles originating in ZIP codes impacted by hurricanes. Vehicles sold at auction can easily be transported across the country. Some effects of flooding remain hidden for several months. Do your due diligence on any vehicle entering your loan portfolio.
Provide More than Just a Loan
Many customers impacted by flood or fire escaped with their lives and loved ones. They didn’t think about grabbing their Social Security cards and passports, or important financial documents. They had more important things on their minds. Now these customers need replacement vehicles, and you can either help them or become a hindrance and lose their business.
Create a list of contact names and numbers for government agencies which can provide copies of important documents. Make sure to provide this list to every individual who applies for an auto loan. If the individual is already a customer, what details do you have in their credit history files that could be useful for them? Offer to make copies, notarize documents or provide a credit reference.
These are very difficult times for disaster survivors. Providing help and support now will go a long way towards creating a life-long relationship in addition to generating great word-of-mouth referrals.
Remember the phrase no good deed goes unpunished. Unfortunately, unscrupulous people thrive on times of crisis when it’s easier to commit identity theft and fraud. While it’s important to be helpful, it’s equally important to stay vigilant on your compliance procedures. Make sure your team is following every step to protect your loan portfolio and ensure compliance. Explain to customers that you are asking for additional documentation to protect their identity. They will appreciate the extra protection. If there is absolutely no credit history available on the customer — or if details don’t add up, then you should tread carefully before issuing credit. A disaster in your community does not mean you should lose money on bad deals.
Don’t Forget About Your Team
Have a location in or near an area affected by a natural disaster? If so, what are you doing to help your staff? They may be dealing with challenging situations involving home, family, and loved ones. Offer your support — and back it up with tangible initiatives. Flexible work schedules, access to mental health advisors, and a warm, caring smile every day can make all the difference.
We’ve had our share of environmental challenges these past few months. Take advantage of the opportunity to support your customers, give aid to those who need it, and strengthen your business in the long run.
With more than 40 years in administering consumer protection products and working hand-in-hand with dealers across the U.S., EFG Companies knows how to structure your loans to be more attractive in the F&I office with F&I products tailored to match your dealership partner’s demographics. Contact us today to find out how.Like This Post