Almost every financial organization has a workout department. Their names are as varied as Problem Loan Administration; Central Loan Department; or Special Assets Department. A dealer could also be assigned to one among these special departments, or a member of the department may start appearing at meeting with the dealer’s regular bank officer.
The courts have consistently upheld the rights of lenders to have workout teams and to have those teams, inside broad parameters, take affirmative actions to guard the lenders’ interests.
Matching the typical dealer’s experience with work-outs, to that of the lender’s experience, can be comparable to matching a highschool football team against an expert team. The professionals have played the sport a whole bunch of times. They’ve seen and heard a whole bunch of presentations, arguments, excuses and reasons for a dealership’s problems, while the dealer, lacking experience, is encountering the trauma for the primary time. Realizing the dealer will probably be a neophyte, with respect to workouts, the next rules are provided the dealer, as a plumb line, to be followed throughout the workout procedure:
1. Do Not Confuse Friendship with Business. Factories and lenders have seen and heard many of the workout plans any dealer could suggest. The have probably seen versions of every plan which have been refined over generations by a few of one of the best minds within the business. Their experience, nevertheless, cannot help the dealer get one of the best advantages for the dealer.
Employees of the factory/lender have an obligation to their corporation and in turn to its shareholders, to get one of the best contract for his or her corporation. There’s nothing improper with that; they’ve a legal duty to their shareholders and creditors to guard them, not you.
They may, nevertheless, indicate whether or not you workout plan is “acceptable” or “unacceptable” to them. If the proposed plan is “unacceptable”, one among two things can occur. The dealer can keep proposing plans, until one is accepted, or the factory/lender might suggest an appropriate alternative.
If the factory/lender suggests a plan acceptable to them, it means just that: the workout plan is suitable to the factory/lender. It doesn’t mean, and mustn’t mean, the factory/lender won’t approve another plan, which could also be more helpful to the dealer, if the dealer knows what to request and easy methods to structure it.
2. Do Not Confuse Optimism with Confidence. Optimism means expecting a plan will work. Confidence means knowing what to do if it doesn’t. Never act without confidence.
3. Do Not Value a Dealership by the “SOT + Assets” Formula. The percentages against that plan working are concerning the same as the percentages against winning the lottery, except the ante is higher.
4. Do Not Say “SOT”. Sometimes a dealer talks when it comes to SOT (Sold Out of Trust) or OT (Out of Trust) with the factory or lender, when the dealer actually has SAU (Sold and Unpaid) units. Once the dealer refers to an out of trust situation, it puts the factory/lender in a precarious position. All forms of rules then come into play, each legal rules and company rules, which might not have needed to take effect if the dealer used the phrase SAU. The factory/lender cannot read minds to know the dealer really meant SAU, as an alternative of SOT. From the moment the phrase SOT is used, the one thing the listener knows for certain is, if there’s a law suit and the listener were asked if the dealer said she or he were SOT on such and such a date, the listener would need to answer “yes.” Don’t put them in that position.
5. Do Not Lie. Don’t deceive yourself; don’t deceive the factory; don’t deceive the lender.
Dealers, who deceive themselves about their problems, how they got there, or their ability to unravel them, base their entire solution upon a lie and, without exception, compound and complicate the unique problems.
A deceive the factory/lender will alienate the one entities which have each the power to assist and probably the most to realize, besides the dealer and the dealer’s family, to find a workable solution. When unsure, remember what Mark Twain said: “I never got hurt by anything I didn’t say.” He also said that when he was ninety, he recollected he had anxious about a whole lot of things in life, most of which never happened.
6. Do Not Panic. There are various challenges in business, and being in need of money is but one among them. Quite a few dealers have been there before and various dealers have survived.
Analyze the issue as if it were another person’s problem, and compose a brief letter as should you were giving advice to a different dealer. The recommendation ought to be to get skilled help. A storm at sea, calls for seasoned sailors. Nobody would need a crew with little experience in storms, unfamiliar with navigation, no charts, no radar and nobody to call upon for advice. A dealer with a SOT problem is in a giant storm, except it won’t go away with time. Without help, the dealer’s family, friends and employees will all be affected. The dealer has to make tough decisions, or time will make them-and the dealer won’t like the choices time makes.
On the time the lender has the second meeting, referred to above, wherein the lender wants the dealer to sign the work-out agreement, the dealer ought to be prepared to structuring of the work-out plan, the handling of a keeper, the tactic of repayment and such.
As soon as you realize you’re OT, your first call ought to be to us (or someone as experienced as us) and your second call (after visiting with us, your attorney and accountant) ought to be to the credit company. Telling the credit company you’ve sold and unpaid units before they let you know, is important to establishing a foundation upon which to construct a work-out plan. At the identical time, Automotive Advisors’ experience is important to the dealer and the dealer’s attorney and accountant, in providing constructive suggestions and in planning and recognizing realistic options.
