Independent Banker - July 2024 - 18

PORTFOLIO
example, 1st National Bank has
carved out a niche by looking beyond
a borrower's credit score. Its lenders
look for borrower stability in areas
such as length of employment
and the time spent in a particular
type of job or industry. If there are
delinquencies, did they occur at the
same time or during COVID-19? Was
there a gap of employment where
they had a problem?
In some cases, a 1st National Bank
lender will look at a deal that a dealer
sends over and say, " If you can get
another $1,000 down, we can do the
deal. " And then, says Buhrmaster,
they are able to make the loan work
for the buyer and the dealer.
Traditionally, the way the industry
has worked is that people shop for a
car, decide on a purchase and then
" You have to be
competitive in the
rate in order to
get in the game,
but dealers are
there to move
the metal. "
-JOHN BUHRMASTER,
1ST NATIONAL BANK OF SCOTIA
sit down with the finance or business
manager at the dealership to figure
out how to pay for it. Banks tend to
capture direct-to-consumer loans
from buyers who are shopping for
pre-owned vehicles outside of dealers,
who want the ability to walk into
a dealership with all cash, or who
simply like the trusted relationship
they have with their local banker.
Personal touch
Buying a vehicle can be an
intimidating process for consumers,
especially in today's market, where
things are constantly changing in
terms of interest rates, pricing and
vehicle technology.
3 tips to help scale indirect financing
1. Participate in one of the alternative aggregator platforms,
such as Automatic USA. Such up-and-coming platforms apply
a similar concept as Dealer Tracker and Route One to a smaller
universe of potential lenders.
2. Build relationships with dealers, so that they understand what
type of credit box your bank is looking for and what type of
deals you're willing to fund. Look for ways to deepen dealer
relationships, such as by offering other business banking
services, C&I loans or floorplan financing programs-financing
that gives a dealership the capital to stock the inventory on
their car lots.
3. Stay informed about new solutions. Creating dealer
relationships often requires specific technology, staffing and
the ability to integrate with these very large national platforms,
so smaller community banks may not have the bandwidth to
partake in this strategy. However, there are " business in a box "
software solutions that community banks can integrate to help
create efficiencies, particularly on the loan servicing end, that
can help banks handle a larger-scale business.
" One of the big benefits of going
through the bank for your auto loan is
the personalized service, " says Amber
Huschka, a regional banking manager
at $13.7 billion-asset Bell Bank in
Fargo, N.D. " It's comforting to know
you have someone on your side who
wants you to get the best out of that
purchase and be happy with it. "
Community banks work with
customers before, during and after a
loan closes. Before customers go out
and fall in love with a car, bankers
can have important conversations
about their budget and determine
a comfortable monthly loan
payment amount.
" The opportunity to do auto
financing is just one small snippet
of the services we're offering our
customers, " says Huschka. " We
really try to educate customers on all
financial decisions to help set them up
for success. "
The process of auto financing is
opaque, and consumers typically are
not educated in it. The dealer is the
beneficiary of the loan, the originator
of the loan and the retailer, which
leads to potential conflicts, according
to Patrick Bayliss, CEO and cofounder
of Carputty, a data and software
18 // ICBA Independent Banker // July 2024
Independent Banker - July 2024

Table of Contents for the Digital Edition of Independent Banker - July 2024
