Each week, we’ll interview one of our experienced Finance Officers for a brief question and answer session about something interesting from the week, along with tips and tricks to make your finance process easier, and their unique perspective on the industries and customers we work with.
This week, we caught up with AJ Ochoa in our Portland office who worked through a deal that needed a re-score on our quote to the customer after another personal guarantor signed on.
Q: Hi AJ, I’m glad I could catch you! Did you have any deals in the last couple of months that needed a re-score after the initial Pre-Qualification or that were a little more difficult?
A: Yeah, I actually had one that we worked on a week or two ago… It was a pretty recent one. That was one was pre-approval for one of our opportunity programs for start-ups. Really solid application. The credit score was up there – I want to say it was in the 700s. This one had two PGs on it, and that’s how we had to do it, because it was a married couple. The wife had excellent credit – had some pretty big credit depth as well – but the husband was the one with the CDL, so we had to add him on there. He had some issues in the past with credit. One thing, he had a bankruptcy. That was several years back, but it still came up on the credit report. So, it went from about a 29% rate to around 35%, with a security deposit that was around 20%, or so. We quoted 10% previously – luckily, they were okay with the terms after the re-score and we were able to close that one.
Q: Who actually put in the Pre-Qualification first, the husband or the wife?
A: It was the wife.
Q: So, after you got the credit release from the husband, that that’s when those issues started to become a bit more clear?
A: Exactly, yeah.
Q: When you had those conversations about the re-score, was it something that came as a surprise? Obviously if they were quoted with something that was a bit lower. If they’re ready to move forward with that, it can be a little bit of a different story if the quote changes, so how did those conversations come up, and how did you handle them?
A: You know, it was actually an easy one, surprisingly. She didn’t give too much push back. She was pretty much okay with it for the most part. She had questions around it, obviously. But I explained, you know, husband’s credit had some dings on it, so we weren’t able to grant the pre-approval terms, but we had this other option where we could finance the full amount. The security deposit is also 100% refundable, so that kind of eased things a little bit. But yeah, she didn’t give a whole lot of push back. We closed that in about nine days from when I received the application all the way until we funded the equipment. She just wanted to make sure she was able to get the truck in the end.
Q: Was she surprised that she was going to need to get her husband involved, or did she go into it knowing that we would probably have to check his credit as well?
A: She wasn’t aware that we needed to add him on there, but she was okay with it after the explanation. I mean, she didn’t have a CDL. We weren’t able to get a deal without the husband, because, again, he was the one with the CDL, and she didn’t have any experience in the field either, so it was going to ding the approval possibly to one of our lower programs if we weren’t able to add the husband on there. So, after we explained that, she was on board, and so was the husband, so it was a pretty easy transaction, even though there were some complications along the way.
Q: That’s probably an important thing to focus on. People aren’t always aware that we may need to check the credit of relevant parties, so in this case it was obviously a factor, but not enough to get them to move away.
A: Yeah, I think as long as you explain to the customer what the situation is, why we’re not able to get the terms that we initially quote, that explanation helps them to move on from what it could have been to what it actually is and see if we’re still able to make it happen in a timeframe that matches their expectations.
Next week we will check in with another one of our finance officers in one of our other offices. Stay up to date and learn more from our valuable resources at www.AmericanEFS.com/The-Bottom-Line
