When you complete a sale with a customer, the furthest thing in your mind is that you may have to sue the customer months or years in the future. Most of your focus usually is on what steps you can take to make sure you do not violate the law or how you can minimize the chance a customer may prevail against you in a lawsuit. Today, we’ll address what you should do to prepare in advance for possible litigation against a customer. Luckily for you, your dealership’s standard credit application is a great tool that can come in handy should you have to sue a customer.
A plaintiff’s lawsuit does not end merely with ‘winning’ a verdict in court. The real success of the lawsuit can be measured by the plaintiff’s ability to collect all or part judgment the court awards. A judgment is not that effective if you can never collect on it. Many plaintiffs find it frustrating to expend legal fees to obtain a favorable judgment only to learn that they cannot collect it. To effectively collect a judgment, you will need to be able to locate the customer and have details on the customer’s assets that may be liquidated or frozen to satisfy the judgment. Your best tool to obtain the information you’ll need is your credit application. Many salespeople and managers take shortcuts in completing the credit application, either by taking a ‘five-liner’ to gain just enough information to access the customer’s credit file, or fill out only what the bank asks to have completed. Instead, use the credit application as an interview tool to gain as much information on the customer as possible. You should aim to have each credit application filled out completely, and monitor each member tasked with gathering the customer’s credit information. Typical credit applications have sections related to past employment, credit references (usually space for 3-5 individuals) and itemization of bank accounts, assets, etc. A credit application, fully completed, may provide you with enough information to track down the customer and attach what assets he or she may have. As an ancillary to preparation for possible litigation, the completed credit application gives your F&I manager great information to tailor an F&I presentation. For example, if the customer discloses that he has little to no savings in his accounts, the F&I manager could use that information to sell the benefits of GAP coverage or credit life/disability insurance. If you use a Customer Relationship Management (“CRM”) system to complete credit applications, your provider may aggregate this information into a wealth of reports you can use to hone your marketing efforts. Increased diligence in completing the credit application benefits the customer because doing so helps detect fraud and identity theft.
Does your dealership require staff to complete credit applications? What are some best practices for accomplishing this?