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9 Crucial “Stips” for Nonprime Financing

October 2007, F&I and Showroom - Feature

by Tim Shea - Also by this author

In recent articles, we’ve investigated some of the ways we shoot ourselves in the foot in nonprime auto sales. This month, we’ll take a look at the importance of verifying customer information. It has often been said that the initial customer interview is the foundation of a nonprime sale. Verifying customer information makes sure your foundation is solid.

The information contained in the application provides the basis for your lender’s approval. Lenders evaluate applications based on the S.A.W. principle (Stability, Ability and Willingness). They fund deals based on the accuracy of the information you provide them, and your customer’s credit application begins this process.

There are few things worse than delivering a vehicle that blows up in funding because some detail doesn’t match up. If you have conflicting information, the time to get it corrected is before you present it to your lenders. Review everything, verify and then verify again.

The key is to catch problems before they happen. Bottom line: Investing a small amount of time on the front-end will pay huge dividends on the back-end. So let’s dig into the nine critical stips you need to collect from your customer, and find out what you need to be looking for to ensure your lenders are getting the most accurate information.

1. Customer ID Verification

• Does the name on the application match the name on the driver’s license?

• Is the applicant a Jr., Sr., II, III or IV?

• Does the middle name or initial match?

• Has there been a recent name change?

2. Driver’s License

• Is the driver’s license valid? Has it expired?

Many lenders will not fund a deal without a valid driver’s license. If it has expired, how long will it take to get renewed?

• What state is it from? Some lenders will not consider an applicant with an out-of-state license.

3. Address

• Does the address on the application match the driver’s license? Look at the dates on the license and the credit application to see if addresses match the time periods. If the license address does not match the bureau or application address, your lender may ask where the applicant actually lives.

• Make sure you have at least three years of residence history.

4. Social Security or Tax ID Number

• Is the Social Security Number valid? Verify whether it is a SSN or Tax ID number (W-7).

• Social Security Numbers never begin with triple zero (000), eight or nine.

• Tax ID numbers typically begin with a nine. Note that W-7s may require special lenders.

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