While automatic decisioning can speed the underwriting process for approvals, it tends to cause a delay on borderline deals, John Lawson, finance director of Lone Star Yamaha, told Powersports Finance.
Every lender has criteria for what it will finance, but some customers have credit that isn’t black and white. For example, maybe the consumer has been rebuilding credit after being hurt during the mortgage crisis in 2008. If the consumer is automatically declined, the dealer can call the underwriter and explain the nuances that don’t appear in the credit application, Lawson said.
However, it’s difficult to have that conversation with a computer. “[With those systems], if you get declined, then you get declined,” Lawson said. “It’s all computer-generated.”
Also, Lawson touts the advantages of the back-and-forth discussion on a loan application. “We deal with consumers face to face,” he said. “If we’re just doing everything transactionally over the phone or online through emails, you’re not able to build that relationship that gives a good buying experience.”
Ultimately, lender-dealer relationships hinge on a strong rapport with credit analysts. “When you build relationships with underwriters, you grow that relationship and you say, ‘Hey, you know what, my customer’s here, can we get an exception on this? Or can we help him out a little bit with his down payment?'” Lawson said. “You can ask for an exception. But you know, the [preapproval] lender, you can’t ask them for anything because it’s so system-driven.”
While Lone Star is typically able to reach credit analysts at MB Financial and Yamaha Motor Finance with ease, it often has trouble getting in touch with underwriters at tech-savvy companies like Roadrunner Financial, Lawson said.