BECKY'S BLOG

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Lenders Tightening Up – More Repos!

Becky Chernek • August 19, 2022

…time to reinforce basic skills and practices

A man is sitting at a desk in front of a computer.

A few days ago, a dealer friend and I were discussing how much lending practices have changed. They’re not buying as deep as they did six months ago. And repos are on the rise.

According to a recent news story, “A perfect economic storm of inflation, soaring gas prices and the unintended consequences of the federal pandemic relief programs is closing in on many car owners.” And this scenario is affecting prime and subprime customers alike.

The industry is feeling the squeeze. Vehicle pricing is at an all-time high and lenders are tightening deal standards.

More important, a lack of skills and experience at the desk, particularly when it comes to how lenders buy, is negatively impacting sales.

A cautionary tale…


Last week, I was consulting for a fairly large volume store. I start my process by doing a deal analysis, sitting at the sales desk and watching how deals come together. In this store, customers seemed happy and salespeople were busy closing deals.


We know the sales desk is the hub – where profits come together. I see the salesperson take his deal to the desk and tell the sales manager, Joe, that his customer doesn’t have the best credit. It seems the customer had some credit challenges in the past but managed to get caught up. Also, the customer recently started a new job making $5,000 per month, but was an independent contractor for two years prior. He tells Joe he submitted the application.


Joe submits the application to several lenders at face value without verifying the information. He goes back to penciling the worksheet and tells the salesperson to present the numbers to the customer. The salesperson returns to the desk and tells Joe the payments are too high. The customer needs a longer term. Can they give the customer a better rate? With a click of a mouse, Joe extends the term to 76 months, reduces the rate and cuts the payment.


It's a perfect storm about ready to break! Incredibly, it happens all the time.


Joe submits the application to several lenders and runs with the best call. He’s thrilled he got a great lender call and the F&I manager will be as well. The customer is happy they got the payment they wanted and the salesperson is overjoyed. He loves working his deals with Joe!


The salesperson hands the deal to the F&I manager and says, “Here you go, we're selling cars today!” The F&I manager replies, “Just bring the customer into the office and I’ll do my magic!”


Now the F&I manager is ecstatic! He sold a VSC, maintenance and GAP! All is going as planned until the F&I manager finally shuffles through the paperwork, including the call back, to be sure he has everything needed for funding.


He notices on the callback there’s a stip for Proof of Income! Of course, he immediately asks the customer for proof of income, only to find out the customer started his new job three days ago! His 1099 will only prove a net total earning of $1,500 per month since he wrote off all his expenses for tax purposes. Everything comes to a screeching halt! The happy situation is about to go sideways.


As it turned out, Joe was able to put the deal together, but not after cutting all the F&I products and $750 off the front. The F&I manager was able to get on the phone and work the deal with another lender that didn’t require proof of income.


There are two lessons here.

First, F&I needs to get involved early, meeting the customer on their terms at the salesperson desk. The F&I manager reviews the application to ensure it’s accurate and determines the reasons behind the slow pay history for a better lender approval.


F&I’s job is to protect the dealership assets. Sales and F&I must work in unison; it’s a team effort. Two heads are always better than one.


Second, know your lenders inside and out. A lender relationship is worth its weight in gold. Lender management is probably the most eroded skill set in the sales and F&I space today.


Many desk managers simply don’t know how their lenders buy. They don’t have a full grasp of the guidelines and may glaze over the LTV, not to mention what credit bureaus the lender uses to make a buying decision. They vary.


Lender reps don’t help matters, insisting the dealer submit the application no matter what – they don’t have a look to book! It’s as though the lenders prefer to keep the dealer in the dark, which likely costs dealers a fortune! In many cases, the manager doesn’t know the lender guidelines, is short-sighted and simply takes the best call and runs with it.


Asking for additional money down or putting an extra $200 on the trade can make a world of difference between getting a conditional approval or a 100% approval with a great rate and term! It happens all the time.


So build better relationships! Get on the phone, call the lender, ask for more – three months, two months or one month in term! Keep asking!


The excuse I hear today is that lenders don’t rehash because they all use internal scoring. Guess what? Ford Motor Credit had internal scoring 20 years ago, but that didn’t stop us from calling them back and asking for more.


Both of these processes – meeting customers early at the desk and lender management –cut time off each transaction, boost customer satisfaction and plug profit leaks.


Brush off the fairy dust

Managers, get back in the saddle and brush off the fairy dust, it’s time to get back to the real world! Work every deal. Cherry-picking deals won’t win you prizes and grow your loyal customer base!


Get your documentation in order. Understand the rules of engagement – and why dotting your i’s and crossing your t’s puts more deals on the books. Get involved earlier in the process and validate the application.


Make sure the customer is on the right vehicle they qualify for the first time. And know your lenders so you can capitalize on every deal!


Coming in the next newsletter…

Did you know online lenders offer vehicle owners refinancing options, as do some insurance companies? These online providers can help cut back on the repos. Great for the consumer, but should auto dealers be alarmed? Chargebacks are on the rise; how can auto dealers make a difference?


Don’t miss my webinar on this trending topic

– Refinancing Made Easy for Auto Dealers!

Chernek – with over 30 years in automotive retail and highly regarded for superior F&I consultation – now offers dealers the flexibility to streamline the refinancing process for the first time ever! Take back control! Keep your customers captive, reduce chargebacks, and sell more cars and products too! Be sure to attend the upcoming webinar, “Refinancing Make Sense for Auto Dealers” on August 17th at 1:00 PM EST.


For more details, visit _________.


______________________________________________________________________________


Schedule a 15-minute Zoom call today!


Unparalleled Experience + Analytics + Gold-Standard Training = IMPACT

Chernek Consulting, founded in 2001, offers automotive dealers exceptional experience-based consultation for multipoint, multi-brand automotive groups to significantly impact performance. Rebecca Chernek has worked with industry leaders such as JM&A, AutoNation, NCM Institute, NCM 20 Groups, NADA 20 Groups, Mercedes Benz Financial Services, Sym-Tech Dealers Services and more.


Rebecca’s comprehensive analysis identifies operational and team strengths and weaknesses. Her focus is on:


1) plugging profit leaks

2) getting the customer on the right car at the get-go

3) cultivating customers for life

4) digitizing processes for maximum efficiency and profit


It’s the little things you do that can make a big difference.


Rebecca gets the entire team on the same page, implementing processes that:


·Meet customers on their terms – online to in-dealership,

·Finalize the transaction in the F&I office with a single-point sales associate, hybrid or a dedicated F&I manager,

·Get the paper off the floor – digitizing the entire workflow, making it easier and faster for the customer to buy a car.

·Get the transaction right the first time out, improving customer satisfaction.


Remove the obstacles to selling more cars – and achieving higher performance on cash, lease and finance transactions!


In addition to onsite consultation, Becky provides continuing education via her F&I On-Demand Virtual Pro platform, with optional video critiques and F&I manager performance monitoring. F&I On-Demand Virtual Pro topics include:


§Digital Retailing/Online to In-Dealership

§Digital Menu/eContracting RouteOne/Dealertrack

§Product Sales/Product Knowledge

§Compliance

§Online Presentation/Offsite Delivery

§Desking Practices/Presentations

§Single-point/Hybrid F&I Approach

§Funding/CIT

§Lender Relationship/Rehash

§Pay Plans

§Process Implementation


CONTACT BECKY CHERNEK TODAY! Ready to take your F&I department to greater heights! CALL OUR F&I SERVICES!

A woman is standing in front of a showroom full of cars.

Indifference in Automotive Retail: The Silent Profit Killer

By Becky Chernek • January 15, 2025
Over the last six months, the buzz around improving F&I performance has grown louder. Everyone’s talking about “getting back to basics” as the magic fix for today’s challenges. Sure, it sounds great—but is that enough to stop the ship from sinking? Let’s be honest: since COVID, selling cars was easy. Customers flooded dealerships, and it didn’t take much to close a deal. A handshake and a smile were often all it took. But now, things have shifted. The market isn’t as forgiving, and many dealerships are struggling to adapt. Yes, the basics matter, but there’s something deeper at play—a dangerous attitude of indifference. I’ve been in hundreds of dealerships, and what I see today is alarming. It’s like the industry is sleepwalking while the house is burning. Are dealers even paying attention? Are they willing to make the hard changes needed to turn things around? The Desk: Where Chaos Begins The desk is the heartbeat of the dealership—the hub where it all starts. But instead of pumping out efficient, profitable deals, it’s often the source of chaos. Years ago, F&I managers were respected as gatekeepers. They weren’t just handling paperwork; they were protecting the dealership’s assets and managing lender relationships with precision. Fast-forward to today, and much of that responsibility has been dumped on desk managers—all in the name of “speeding up the deal.” Here’s the catch: no one’s holding these desk managers accountable. Shotgunning deals to lenders without understanding the total cost of sale has become the norm. Sloppy credit applications, careless errors, and a lack of structure are creating a mess that F&I managers are left to clean up. When deals hit F&I, they’re riddled with issues—missing documents, unchecked details, and no clear process. This disrupts the flow, slows the deal to a crawl, and frustrates customers. It’s a perfect recipe for lost profits and wasted time. Broken Processes, Broken Performance Dealers often wonder why F&I performance is lagging, but the answer is staring them in the face: broken processes. When there’s no accountability, every department operates in silos. The result? Indifference creeps into your culture, and mediocrity becomes the standard. Ask yourself: Are your desk managers partners with F&I, or are they working against them? Are they ensuring every cash deal is turned to F&I? Do they know their lenders, or are they just guessing? Are they sticking to consistent pencils, or throwing out 84-month terms with no money down as a starting point? If you’re not checking these things regularly, you’re leaving money on the table. A worksheet is no different from a menu—both need to be precise, consistent, and aligned with a process. How Chernek Consulting Can Help At Chernek Consulting , we understand these challenges and provide solutions that work. Our services are designed to address the root of the problem: your dealership’s process and culture. We offer: Customized In-House Training tailored to your dealership’s unique needs. Virtual Training Programs to ensure ongoing education for your team. AI Champion Roleplay to simulate real-world scenarios and elevate team performance. Comprehensive Process Audits to identify inefficiencies and areas for improvement. Desk and F&I Alignment Programs to create a cohesive, results-driven culture. When you work with Chernek Consulting, you’re not just improving performance—you’re transforming your dealership into a profit powerhouse. The Cost of Complacency Here’s the harsh reality: indifference costs you talent. Why would top performers stick around in a dealership that tolerates chaos? Talented people want to work in an environment with structure, accountability, and a commitment to excellence. If you’re not providing that, they’ll find a dealership that does. I recently asked my F&I Today group what above-average F&I performance should look like. The consensus? It’s not just about numbers; it’s about alignment. The desk and F&I need to operate as one unit, with shared goals and mutual accountability. Fix the Process, Fix the Culture Dealers, if you’re serious about turning things around, it’s time to do more than “get back to basics.” You need to fix the root of the problem: your process. A strong, consistent process doesn’t just improve performance—it transforms your culture. When everyone is on the same page—desk managers, F&I, and sales—you create a dealership that runs like a well-oiled machine. Customers feel the difference. Deals close faster. Profits grow. At Chernek Consulting, we specialize in helping dealerships implement these changes effectively. The question isn’t whether you can change—it’s whether you will . Visit Chernek Consulting for more information or call 866-894-1899 to schedule your consultation today. For F&I beginners be sure to sign up for Chernek Consulting Virtual Pro interactive F&I courseware upgrade to AI Champion Roleplay! Contact Becky to find out more details, available for individual users and dealer group levels. We also customize all training content to fit your exact requirements.
A woman is holding a piece of paper in front of a city skyline.

Is Brooming Customers Another Covid Side Effect?

By Becky Chernek • August 19, 2022
Recently I’ve experienced a strange déjà vu when providing onsite consultations. I’m reminded of a time when I was working with a dealer in Arkansas who purchased a Buick / GMC store. He told me there wasn’t much meat on the bone and not to expect much in F&I performance. Most customers paid cash or had prime credit. “No problem,” I thought. After all, I can positively impact any operation. But I couldn’t help wonder why the dealer didn’t get any tier three or four business. The customers at dealerships up the street seemed to represent a full cross section of buyers. It didn’t make sense. I continued to ask questions until the dealer came up with a brilliant idea (or he got tired of my harping). He decided to spiff the sales people one weekend $40.00 per write-up. “Just come to the desk with whatever write-up, no matter the credit, and you’ll get $40.00.” The following Monday, the dealer called to report he had plenty of tier three and four customers. If you’re reading between the lines, you already know where I’m going. The store didn’t have any subprime lenders – or the F&I manager wasn’t keen on working subprime customers. The salespeople thought, “Why bother selling a customer a car if they said they had slow or derogatory credit history?” So they broomed the customer, sent them packing to the competitor down the street and moved to the next customer who could buy a car. Is this you? Be honest. Because this is exactly what is happening in dealerships throughout the United States today. This is the dark side of the pandemic’s silver lining for auto retail. The front is making big profits on preowned cars today. They don’t have to take the skinny deals or cut profit to swallow a lender fee. Those vehicles aren’t easy to come by, so they’re being saved for the customer who’s going to pay all the profit. Who can blame them? But will it pay off in the long run? Are you sending customers to your competitor, CarMax, Carvana, Vroom or independent dealers who are lining their pockets with the deals you don’t want? The sales manager may not see the value in a lower-tier customer today, but your competition does. Because when you treat a customer with slow pay history right, you have a customer for life. What about the customer who just paid full gross? Will they use your service department? Does it matter? That’s a discussion for another day. You may not realize it, but many of the larger dealer groups have their own in-house financing with internal scoring metrics. They’re not only going to sell more cars; they’ll earn more profit doing it. They will take the market share if you don’t do something about it. Some say, “Ok, let them,” but remember when CarMax offered to put an appraisal on every trade whether the customer was going to buy a car from them or not? Talk about clever! Today, customers go to CarMax to get a trade value even before they step foot in a dealership. In fact, your sales manager likely sends the customer to CarMax to get a trade value! Is that you? Today’s most successful dealers aren’t fixed in their ways. They have a growth mindset and continually adapt to the changing market! This bubble won’t last forever. Do you have the necessary skill-set and processes in place today to meet market conditions tomorrow? Schedule a 15-minute Zoom call today! Unparalleled Experience + Analytics + Gold-Standard Training = IMPACT Chernek Consulting, founded in 2001, offers automotive dealers exceptional experience-based consultation for multipoint, multi-brand automotive groups to significantly impact performance . Rebecca Chernek has worked with industry leaders such as JM&A, AutoNation, NCM Institute, NCM 20 Groups, NADA 20 Groups, Mercedes Benz Financial Services, Sym-Tech Dealers Services and more. Rebecca’s comprehensive analysis identifies operational and team strengths and weaknesses. Her focus is on: 1) plugging profit leaks 2) getting the customer on the right car at the get-go 3) cultivating customers for life 4) digitizing processes for maximum efficiency and profit It’s the little things you do that can make a big difference. CALL BECKY CHERNEK DIRECT AT 866-894-1899 schedule a 15 - minute call today!
A group of men are writing on a whiteboard in a room.

MAKE PROFITS IN DOWN MARKET - Engaging Earlier Drives Performance!

By Rebecca Chernek • August 19, 2022
History repeats itself. Since Covid, dealers have been rejoicing in record-breaking profits but will they prepared to roll-up their sleeves when the seasons change?

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