I was asked at the magazine’s September F&I Conference and Expo when I thought this mess we’re in would turn around. My response was, “Ask me again this time next year.”

If you’re looking for certainties, forget it. A state association and a major research firm attempted to do that last January when the “R” word (recession) was first being tossed around. Both said they saw a recovery happening by the first and second quarter of next year, and that we’d know for sure where we stood by the halfway point of this year. Unfortunately, all we learned was the situation would intensify.

I think the biggest overstatement right now is that the credit markets are frozen. There are some 10,000 lenders out there, so how can the market be frozen? Yes, people with 700 credit scores aren’t getting through like they used to, but we’ve said all year long that credit scores would no longer be the single factor of credit worthiness.

Nomis Solutions’ Dr. Robert Phillips echoed that during his keynote speech at the conference. His company is helping finance sources like AmeriCredit, Ford Credit and Chrysler Financial put their market data to better use. And these new strategies include examining the performance of loans originated at your store the last few years.

If you don’t believe me, look at Bill Heard Enterprises.

A GMAC spokesperson said the decision to cut off the 89-year-old dealer’s floorplan financing was part of a regular review of credit risk. Basically, the company took whatever action was necessary to mitigate risk. And all you need to do is read the lawsuit filed by the Georgia consumer protection agency against “Mr. Big Volume” to understand what risk GMAC was seeing.

So, for those dealers that didn’t do things right and fudged income numbers to get customers into more car than they could afford, your fate is already written. So don’t blame a frozen market for a lender disconnecting your dealership.

The reality is we grew too fat. And I’m not pinning this just on auto. However, we allowed too many consumers to dictate their credit worthiness. Bottom line, we forgot how to say “no.” So the fact that you can’t get a customer with a 700 credit score financed without proof of income should not be a surprise to anyone. In fact, lenders hinted at today’s reality all year long.

Take our People section. In August we published an announcement about GMAC employing two new risk managers, positions that never existed at the company. I’m sure both were familiar with Bill Heard.

So what’s our new reality? I can’t say exactly what the bailout package passed in October will do, but I can tell you without a doubt that it’s not going to bring back the good old days.

CNW Market Research, reporting on the first three quarters of 2008, said subprime credit applications were being shopped at 3.5 more institutions than the year-ago period. Even the number of institutions shopped for prime credit applications doubled since last year.

The landscape is changing, and right now dealers are getting better calls from local finance sources. Many of these local banks are even buying deeper. Credit Unions also remain active, and they are also buying deeper. Yes, there have been complaints about credit unions not playing fair in the give-and-take game, but I think you’re only hurting yourself if you haven’t explored their offerings.

The only draw back from those two lending segments, at least from what I hear, is that they’re more reluctant about buying back-end products. That’s not the case with the major lenders. The question then is, what interest rate can your customer bear?

And like the 1,200 attendees heard at our conference this year, there is no cookie-cutter answer to what lenders are looking for. The reality is lenders are taking a more geographic approach to lending, as recent data from Experian Automotive points out. Melinda Zabritski, director of automotive credit, said lenders are incorporating a more geographic influence to their lending programs, so lending practices employed in Dallas won’t be the same as the strategies used in Houston.

Reality checks don’t always feel good, but sometimes they’re exactly what the doctor ordered. The adjustments you need to prepare for are smaller advances, limits on back-end products, and less tolerance for bad credit.

We also need to get better at asking our customers for more money down. As a percentage of the transaction price, down payments were already reaching 19 percent in the third quarter, the highest mark in the last seven quarters. It probably won’t be long before that hits 20 percent.

The unfortunate part of all of this is I don’t think Annette Sykora, chairwoman of the National Automobile Dealers Association, was overstating the situation when she said we could lose up to 700 franchised dealers this year. That’s what happens during a correction.

So, while I won’t answer when I think this crunch will end, I will say that I truly believe we’re going to come out of this. Why? What else is there to hope for. Let’s just hope we’ve learned from our mistakes when this thing turns around.