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Shawn FosterExecutive Trainer
The Key to Approvable Deal Structures in SF
How to Structure for Maximum Profits!
4 Keys toWin-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!
ApprovalsFinance 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.
You just eliminated #2 which gets the finance company excited about #1
There are two parts of the finance equation
For the Love of Imports!
#1.) The Customer#2.) The Vehicle
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 InventoryStock No. Year Make Model Mileage Cost Average Trade Average Loan
SF1001 2008 Saturn Ion 63,000 8,300 9,000 8,300SF1002 2010 Ford Focus 48,750 9,800 11,000 10,000SF1003 2009 Chevy HHR 29,300 8,800 10,000 9,200SF1004 2008 Ford Explorer 47,000 9,900 11,000 10,000SF1005 2011 Chevy Malibu 23,000 11,700 13,500 12,000SF1006 2010 Ford Taurus 19,000 12,000 13,500 11,500
SF1007 2007 Jeep Grand Cherokee 61,000 12,500 13,500 11,500SF1008 2009 Chevy Silverado 60,500 13,200 13,000 11,000
SF1009 2009 Chevy Colorado 28,000 14,500 13,000 10,500SF1014 2009 Honda Civic 36,000 14,500 13,800 10,700SF1011 2009 Mercury Monterey 51,000 13,500 14,000 12,750SF1010 2009 Chevy Trailblazer 49,600 15,500 17,000 15,000
SF1012 2011 Suzuki Grand Vitara 46,000 12,800 14,500 13,000SF1013 2009 Toyota Camry LE 33,000 14,500 13,500 12,000
Questions to be AnsweredDoes 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 mont
h
InventoryStock 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
Structuring the Deal with BFFPayment? 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
Structuring the Deal
- Is There a Deal? Payment? PTI = 20% $1,850 mo X 20% = $370.00Max Payment$370.00Pmt. factor ÷ 0.025Max to finance $14,800Need to finance $14,800 ✔
What it Looks Iike…Payment? PTI = 20% $1,850 mo X 20% = $370.00/mo.Max to finance $ 14,800SF 1004 Avg. Trade $ 11,000110% of Avg. Trade $ 12,100 (Max vehicle amount financed)Add cash down $ 1,000Max sale price $ 13,100Subtract tax & fees ($ 1500)Net funds rec’d $ 11,600Cost of SF1002 $ 9,900Deal? $ 1,700 (135% of NADA = $14,800 max amt. financed)Available Back End $ 2,700 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.
For More Information:
Visit http://www.dealerstrong.com/ Call our office @ 877-811-8107
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