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OK, who doesn’t?  With relentless competition from the auto dealers and other competitors, it’s harder than ever to gain vehicle loans.  But here’s a tip that could help you and your front line team build a member relationship that will endear you to them while at the same time, help capture more loans.

Work from the savings side:

That’s right, work from the savings side.  It starts with a DREAM.  When your MSR or lender open a new account, or when closing a loan for a member, strike up a conversation with the member about savings goals.  “Is there anything at all that you would love to save for?  A family vacation that you’ve always wanted?  Christmas without the debt and the guilt?  Down payment on a home or a loved one’s education?  Or even just some emergency money for peace of mind?” Spend time talking about it with the member and learn their dream.

Then ask some simple questions:

• “How much would you need for that, realistically?”  or  “How much did you spend on Christmas last year?”
• “By when would you like to have that set-aside?”  Get the exact year and month.  Narrow it down.  That’s the term.
• “How often are you or your spouse paid?”  Look for bi-weekly or weekly if possible.  You want to figure out the total number of pay periods until the end of their term.
• “OK.  Let’s do the math together.”

Now it’s just a simple math problem:

For example, suppose Mary wants to have $1,000 for Christmas by December 15^th next year.  That’s 26 pay periods in the year. If she is paid bi-weekly, then it’s $1,000 / 26 pay periods of $38.46  per payroll.   Ask her how realistic that is, and if she says it’s not, then find out how much WOULD be each pay period, and multiply it back by the TERM to get the amount she would save or divide that lower amount into the total Dream goal to figure out how much longer she would have to wait.

Now for the LOAN part:

“Want me to help you find some free money toward that goal?”  I have asked this question many times to the wonderment of the member who typically asks “What’s the catch?”  To which I reply, “Tell me about the loans you have elsewhere.  Like car loans, a mortgage, or credit card debt that you want to get rid of.  Maybe we can refinance them for you and add to your savings goal!  Do you have any of them?  Let’s see if you qualify!”  And direct deposit makes both the savings effort and the LOAN payment automatic.

If your new accounts and lenders do this, then they are leveraging the member’s initial request while at the same time showing genuine care and concern for their member.  If they don’t, then they are just plain missing out on some fantastic opportunities to build thrift, and instead just doing their job.  Find a way to help them get this done and watch your long-term relationships blossom into more loans and member referrals!

Written by:

[author] [author_image timthumb=’on’]http://insurancetrustweb.com/newsite/wp-content/uploads/sites/10/2017/12/Joe-Schmitz.png[/author_image] [author_info] Joe Schmitz – President & CEO of Cherry Creek Financial Services. Former Compliance Manager with the Wisconsin Credit Union League, loan officer and director of fee income for a $3 billion financial institution. [/author_info] [/author]

When a member is financing a used vehicle with your credit union, it is critical to ask them to see the Used Vehicle Buyer’s Guide during the loan application process.

The Used Vehicle Buyer’s Guide contains many important factors that can affect the vehicle’s value.  Maine law requires dealerships to display this document in the window of all used vehicles for consumer disclosure.  However, the law DOES NOT require dealers to disclose this guide to the credit union (i.e. lienholder) so this important information can be easily overlooked regarding a loan decision.

What info can be found on the Used Vehicle Buyer’s Guide?

• Year, make and model
• Prior use (personal transportation, rental vehicle, municipal, etc.)
• How the vehicle was obtained
• Major mechanical problems (motor, transmission, etc.) even after repair
• Prior damage (resulting from fire, flood or collision) exceeding $2,000 in repair
• Warranties offered by the dealer (indicating either: Dealer Express Warranty, AS IS or Maine State Inspection Only also referred to as Warranty of Inspectiblity)

Why is it important to consider this information?  

The most important reason to consider the Used Vehicle Buyer’s Guide information is loan-to-value (LTV). Every credit union has differing loan policies that state how much they are allowed to lend with regard to LTV. Most credit unions use the NADA Used Vehicle Guide to determine a vehicle’s clean retail value.  The definition of clean retail is: No mechanical defects and passes all necessary inspections with ease; paint, body and wheels may have minor surface scratching with a high gloss finish; interior reflects minimal soiling and wear, with all equipment in complete working order; vehicle has a clean title history; vehicle will need minimal reconditioning to be made ready for resale. However, a vehicle that is listed as “Maine State Inspection (MSI) only” or “AS IS”, is NOT a retail unit and can be worth far less than the value stated by an NADA valuation.  In most cases these vehicles do not qualify for a vehicle service contract, but if they do, most or all of the claims submitted will be denied for preexisting conditions.

What does Maine State Inspection (i.e. Warranty of Inspectability) mean?

Used cars that are sold by a dealer as retail must have an inspection sticker issued within the past 60 days. This is called a ‘Warranty of Inspectability’. This indicates that the vehicle has been inspected for the purposes of issuing an inspection sticker, and will pass inspection on the date of purchase.  However, vehicles designated as ‘MSI Only’ have passed on ONLY inspectable safety items.  Mechanical components such as the engine and transmission have not been inspected or verified by the dealer.

When may a used car be sold without a Warranty of Inspectability?

If a vehicle does not have a valid inspection sticker, it will have a posted ‘Unsafe Motor Vehicle’ certificate. This certificate is completed by a licensed inspection mechanic and indicates the car was inspected, but did not pass. The certificate will list the items that failed inspection. If a member is financing a car with this designation, the vehicle must be towed from the dealer’s lot, cannot be test driven on Maine roadways, and cannot be issued a temporary plate.

The Used Vehicle Buyer’s Guide says that the vehicle is “repaired” “salvage” “rebuilt salvage” or “rebuilt”, what does this mean?

These brands indicate that the vehicle has been declared a total loss by an insurance company, and has been repaired. This may affect the value of the vehicle and some insurance companies may either not approve or provide a reasonably affordable insurance policy option on vehicles with these branded titles.
Is the dealer required to give a 30-day warranty on used vehicles?

No. Maine law does not establish a set warranty coverage (other than state safety inspection warranty). Maine law also does not specify what components and terms a warranty will cover. In many cases, a dealer will have standard written warranty coverage. Review any written warranty carefully to determine the length of the dealer’s warranty and the items covered for your used car. These will be listed on the ‘Express Warranty’ section of the Used Vehicle Buyer’s Guide.

If a member has a question or concerns regarding information contained on a Used Vehicle Buyers Guide, they can contact the Maine Bureau of Motor Vehicles Office of Investigation on the State of Maine website.