Many dealerships don’t know how to approach credit unions, Shenk says. “Here’s the key mistake that’s made in most dealerships: The owners believe it is the finance manager’s job to establish that relationship and find the money. That is wrong. It’s the owner’s job to find it and establish it. It’s the finance manager’s job to administer it professionally.”
Shenk suggests that dealers have lunch with an employee of their local union. A good relationship can pay big dividends when it comes to timely approvals, he says. “We got guys who are doing the deal and then calling the credit union and saying, ‘Mr. Smith is coming over. Here is all the information. Can you have somebody ready to do his paperwork in 30 minutes? He’s going to have an envelope with everything in it ready to go.’”
Shenk admits that many dealers aren’t willing to do so much work. “You just got to jump through the extra hoop,” he says. “The reality is, when the other dealers aren’t doing it, it just makes it that much more opportunity for those who are.”
Steve Zarwell is an industry consultant and Dealernews columnist. He reports that some dealers don’t like credit unions because they typically pay a finder’s fee instead of interest participation or some other kind of kickback. “I’ve seen the finder’s fee as high as $200 and low as $50,” he says. “It averages $150. So a lot of dealers who in the past made money in financing — and essentially those days are nonexistent — they don’t like the idea of making only $150.”
That attitude is shortsighted, Zarwell says. “I ask them, ‘Why don’t you forget about the $150 and just not sell them a motorcycle?’ The credit union enables them to have a customer, and they get $150.”
The finder’s fee is often negotiable, Zarwell says, as are the other terms of the relationship. Typical questions to ask a credit union: What will you loan up to? Will you base the loan amount on the price invoice or the MSRP? And will you add $500 so I can include an extended warranty or something else?
In an F&I report we published last year, Zarwell suggested (only half jokingly) that dealers with only three or four sources of financing should be horsewhipped. He said a good place for dealers to start shopping is their own banks, though they shouldn’t stop there. “I’ve actually gone to a store, looked in the phone book, printed it on the copy machine and said: ‘If you’re lazy and don’t want do it, then take Sally up front, the greeter, and have her call all these people and ask them if they do motorcycle loans.”
