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JAMIE LaREAU
How military personnel can pose a credit challenge
| |  | Jamie LaReau covers auto dealers for Automotive News | |
Some military personnel suffer dings to their credit rating when they serve overseas.
And that means some finance and insurance managers must spend a lot of time and effort finding lenders to finance them. It might even mean sacrificing some profit in the process, dealers say.
But the solutions to the problem are complex and often rest on the soldier.
Used-car dealer and U.S. Army veteran Monty Van Dyke knows all about bad credit. He had a 390 credit score when he was discharged in 1997, he says.
"My credit score was terrible because of deployments," says Van Dyke, co-owner of Payless Car Sales, an independent used-car dealership in Killeen, Texas. "I'm responsible for that, I understand. But some times the mental state some people are in when they're deployed is such that paying their bills is not their priority. Staying alive is."
Payless, near Fort Hood in central Texas, sells about 700 used vehicles annually; some 85 percent of them are sold to soldiers and veterans.
There are many other reasons why some military personnel see their credit rating plummet, experts say.
One reason is the soldier or other military member fails to set up an allotment. Instead, the soldier trusts someone to pay the bills while he or she is deployed, only to find that person failed to do so, says Dave Francisco, the national sales director for Vets-Cars Group in Oceanside, Calif. Francisco was a military liaison for a large dealership group close to Camp Pendleton in San Diego before becoming general manager of that group's Saturn store.
Another blow to a soldier's credit comes when he or she buys a new vehicle, gets deployed and then voluntarily allows the lender to repossess it, Francisco says.
Low credit ratings mean higher interest rates. It also means lower profits for some dealers, Francisco says. "The dealer ends up selling the car, but in the end nobody really made any money. It cost the dealer time and effort," he says.
There is no straightforward solution once the credit score is damaged, experts say. It takes a dedicated F&I officer to find lenders willing to buy the paper.
And it takes a veteran who commits to repairing his or her credit.
That's what Van Dyke did. It took him a few years, he says, but today his credit score is 817.
JIM HENRY
Spot deliveries likely to take heat
| |  | Jim Henry is a special correspondent for Automotive News | |
There's a growing sense among vendors and industry lawyers that federal regulators will "do something" about spot delivery -- though no one seems to know which regulators will do what, or when.
Whether by design or by accident, if a spot delivery, in which the customer signs a contract and takes the car before the dealership sells the paper, falls through, the customer has to come back and sign a new deal -- more than likely a more expensive new deal. The Federal Trade Commission last year steered roundtable discussions on auto lending to spot delivery and so-called yo-yo financing.
Bill Fowler, CEO of E-Net Financial Services Inc., said in an interview last week that the handwriting is on the wall. He predicts the Consumer Financial Protection Bureau will make spot deliveries virtually impossible, along with a lot of other F&I practices that are standard procedure today.
Fowler's company, outside Seattle, is working on a compliance program to be sold to dealers. So it's in his interest to get dealers and lenders worried about compliance.
But that doesn't necessarily mean he's wrong.
Legal experts for the National Automobile Dealers Association and the American Financial Services Association have a different opinion. At auto finance conferences, officials from NADA and AFSA have said it's too early to tell what the Consumer Financial Protection Bureau will do. NADA also points out that franchised auto dealers were "carved out" of the bureau's jurisdiction.
Even so, that still leaves the FTC. Some day, lenders could find themselves on the hot seat over spot deliveries, and maybe dealers, too. But today, it's hard to predict who will be applying the heat.
How a dealership group overhauled F&I
 Looking for solutions to your F&I challenges? Your peers might have answers that will work for you. Mike Hanks, general manager of Bob Hall's Automotive Group in Yakima, Wash., will be one of three dealership officials presenting during a session called “Dealers Share Their Best F&I Practices.” ...  story
| VW Credit to expand operations in Chicago area, hire 150 people
 Volkswagen's financing arm, VW Credit, is expanding its offices in suburban Chicago to meet what the company describes as an “upsurge in growth in recent years.” ... story
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