the key to approvable deal structures in sf...copyright 2016 used car university, all rights...

Copyright 2016 Used Car University, all rights reserved

The Key to Approvable Deal

Structures in SF

How to Structure for

Maximum Profits!


4 Keys to

Win-Win-Win Deals

Correct vehicle (Inventory)

Optimum deal structure.

• Get vehicle gross first.

• Maximize back end call.

Down payment.

(It all goes to gross profit!)

Rehash with finance company.


Make it Appealing

• Stop turn downs before they happen

• Finance companies want to approve deals

• Proper PTI and LTV is critical

• With the right car and the right structure, everybody wins!


Approvals Finance company buyers look for reasons to turn down a deal.

Finance company buyers get paid to buy deals. They want to make it happen


PTI and LTV

Proper vehicle selection will allow you to submit deals in the 12-15% PTI range.

Start all deals below a 620 beacon at 99% of LTV or less. Get the customer on the approval grid first.


Turn Downs

Dealers submit bad structures daily. Effectively creating their own turn downs.

If a customer has a $1,500 per month income and the deal structure calculates a $350 payment, your already dead in the water.


Let’s Structure a Deal!

• Customer makes $1,850 per month

• She qualifies for a max PTI of 20% $370

• Her credit score is 525


Start with a Dummy Deal! Stock No. Year Make Model Mileage Cost Average Trade Average Loan

SF1001 2008 Saturn Ion 63,000 8,300 9,000 8,300

SF1002 2010 Ford Focus 48,750 9,800 11,000 10,000

SF1003 2009 Chevy HHR 29,300 8,800 10,000 9,200

SF1004 2008 Ford Explorer 47,000 9,900 11,000 10,000

SF1005 2011 Chevy Malibu 23,000 11,700 13,500 12,000

SF1006 2010 Ford Taurus 19,000 12,000 13,500 11,500

SF1007 2007 Jeep Grand Cherokee 61,000 12,500 13,500 11,500

SF1008 2009 Chevy Silverado 60,500 13,200 13,000 11,000

SF1009 2009 Chevy Colorado 28,000 14,500 13,000 10,500

SF1014 2009 Honda Civic 36,000 14,500 13,800 10,700

SF1011 2009 Mercury Monterey 51,000 13,500 14,000 12,750

SF1010 2009 Chevy Trailblazer 49,600 15,500 17,000 15,000

SF1012 2011 Suzuki Grand Vitara 46,000 12,800 14,500 13,000

SF1013 2009 Toyota Camry LE 33,000 14,500 13,500 12,000


For the Love of Imports!

2009 Honda Civic 36,000 miles

NADA Trade is $13,000

Structure deal at < 99% LTV which equates to a payment of approx $325 with $500 down.


For the Love of Imports!

• the customer

• the vehicle

There are two parts of the finance equation

You just eliminated #2 which gets the finance company excited about #1


Rehash

Now that you have the customer approved in the system with a solid deal structure, go back to the lender and start over.

Switch cars and structure to fit gross profit needs while matching the lender’s advance policies.


Your Inventory

Stock No. Year Make Model Mileage Cost Average Trade Average Loan

SF1001 2008 Saturn Ion 63,000 8,300 9,000 8,300

SF1002 2010 Ford Focus 48,750 9,800 11,000 10,000

SF1003 2009 Chevy HHR 29,300 8,800 10,000 9,200

SF1004 2008 Ford Explorer 47,000 9,900 11,000 10,000

SF1005 2011 Chevy Malibu 23,000 11,700 13,500 12,000

SF1006 2010 Ford Taurus 19,000 12,000 13,500 11,500




SF1014 2009 Honda Civic 36,000 14,500 13,800 10,700






Questions to be Answered

Does the customer qualify for the finance company?

What payment can the customer qualify for?

What is the most you can finance on the vehicle? The whole deal?

Do you have a car deal?

What is the front end gross profit? Back? Total?


Structuring the Deal

Payment? Payment

to income =

20%

$1,850 mo. X 20%

= $370.00

per month


Inventory Stock No. Year Make Model Mileage Cost Average Trade Average Loan

SF1001 2008 Saturn Ion 63,000 8,300 9,000 8,300

SF1002 2010 Ford Focus 48,750 9,800 11,000 10,000

SF1003 2009 Chevy HHR 29,300 8,800 10,000 9,200

SF1004 2008 Ford Explorer 47,000 9,900 11,000 10,000

SF1005 2011 Chevy Malibu 23,000 11,700 13,500 12,000

SF1006 2010 Ford Taurus 19,000 12,000 13,500 11,500




SF1014 2009 Honda Civic 36,000 14,500 13,800 10,700






Structuring the Deal with BFF

Payment? Payment to income = 20%

$1,850 mo X 20% = $370 per month

Max Deal Potential

Vehicle Total Deal

Avg Trade $11,000 $11,000

X 110% X 135%

$12,100 $14,850 MTF is $14,800

Pmt. Factor 0.025 0.025

$302.50 $370.00 20 % PTI


Structuring the Deal

- Is There a Deal?

Payment? PTI = 20%

$1,850 mo X 20% = $370.00

Max Payment $370.00

Pmt. factor ÷ 0.025

Max to finance $14,800

Need to finance $14,800 ✔


What it Looks Iike… Payment? PTI = 20% $1,850 mo X 20% = $370.00/mo.

Max to finance $ 14,800

SF 1004 Avg. Trade $ 11,000

110% of Avg. Trade $ 12,100 (max veh. amt. fin.)

Add cash down $ 1,000

Max sale price $ 13,100

Subtract tax & fees ($ 1500)

Net funds rec’d $ 11,600

Cost of SF1002 $ 9,900

Deal? $ 1,700 (135% of NADA = $14,800

Available Back End $ 2,700 max amt. financed)

Subtract SC Cost ($ 1,000)

VSC Profit $ 1,700 = $3,400 Total Deal!

✔


Do You Have Low F&I

Gross Profits in SF?

Generally caused by selling to much vehicle, not leaving ability to squeeze F&I products inside required payment or LTV.

Take one step down in vehicle price allows you to add in F&I products and gross profit WITHOUT SACRIFICING FRONT END GROSS.


4 Keys to

Win-Win-Win Deals

Correct vehicle (Inventory)

Optimum deal structure.

• Get vehicle gross first.

• Maximize back end call.

Down payment.

(It all goes to gross profit!)

Rehash with finance company.


Thank You

Contact information

[email protected]

765-718-6633

mailto:[email protected]

the key to approvable deal structures in sf...copyright 2016 used car university, all rights...

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