The Way to a Lender's Heart

If a trouble-free credit application is the way to a lender's heart, the Suburban Auto Collection dealership group must have admirers in the jaded financing world.

“We strive so that, when a lender gets a credit application from Suburban, there will absolutely not be a problem with it,” says Gary Allgeier, financial services director for the 48-franchise chain based in Michigan.

That flawlessness ranges from the application being filled out completely to the absence of fudged information.

Suburban compels its finance and insurance staffers to shoot straight. Those that don't will “get fired,” Allgeier says.

The credit crisis has hit auto retailing hard, creating tight-money situations in which some would-be vehicle buyers can't get financing.

Many frustrated dealers tell of deals falling apart for motivated customers because credit can't be obtained, especially for consumers with so-so credit scores.

“We have more customers than can be financed,” says David Kelly, director-credit operations for Eastern Automotive Group, with dealerships in Maryland and Virginia. “It's a struggle.”

Many lenders have become picky not only about whom they lend, but also which dealers they do business with.

Allgeier says that bodes well for Suburban, employing 1,500 people at stores in Michigan and Florida, selling everything from Saturns to Bugattis.

“We ask lenders, ‘What can we do to help you?’” he says at an F&I Management and Technology conference. “That's not a question they hear often. Because of our relationship with lenders, we're in pretty good shape today.”

Many dealers relied on business models of high volumes and low margins, Allgeier says. The Bill Heard group was a 2008 victim of that business model.

“In this business, volume is the veil of all sins, and we've seen it lifted,” Allgeier says.

Auto finance firms are exercising a newfound authority in their relationships with dealers, says Charlie Robinson, vice president-F&I for Asbury Automotive, a dealership chain with 95 stores.

“Lenders are trying to take the strength of the relationship back to their side,” he says. “Before, we had control. Before, we could put just about anything on the road.”

Meanwhile, as dealers across the nation struggle, keeping a positive attitude becomes a competitive edge, says Marvin Eleazer, financial services specialist at Langdale Ford in Valdosta, GA.

“Attitude is absolutely everything,” he says. “Our dealership is trying to build confidence, keep morale high and make our people realize how important they are. That rubs off on customers and helps close sales.”