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Every day, I talk to dealers who are either interested in or already using auto finance leads. They also come to me with specific questions about how to handle special finance customers.
Let's walk through a question I get a lot:
Dealer: I want to work with subprime clients, but I do not have the right inventory to do so. Any recommendations for finding inventory? Where do I go?
My Response: The first thing you would have to do is find the cars that work well with secondary payment calls. When working with special finance situations, you are working the deal backwards instead of building a structured deal for a prime customer on a specific car.
I recommend getting low-mileage, late-model-year cars that book out well with banks doing subprime. The average price of the cars should be between $7,000 and $15,000, and their mileage should be under 80,000. This combination gives a better opportunity to get a longer approval term and a lower rate to maximize the payment call.
As for where to go and find these cars, I suggest you go to your regular dealer auctions such as Manheim. Check out other dealers like CarMax, Honda, and Toyota that have auctions for used cars, trades and silent auctions. I would also suggest concentrating on local trades with decent mileage from previous customers, as well as the new customers just trying to upgrade their present vehicle.
Depending on your store, I would suggest having 20-30 cars set aside just for subprime and mark them with red stickers on the windshield. That way, when you have a customer that falls into the special finance category, you will know right away that they have a variety to choose from — and you have the cars that will book out and make you money.
Once you embrace subprime and have the ingredients to cater to it, the results are profitable and you won’t be leaving money on the table. Good Luck!
Mark Fernandez is an auto finance marketing consultant for Carloan.com. He has been working with special finance consumers since 1997 and brings that expertise to helping his dealer partners sell more cars. You can reach Mark at 804-521-8579 or via email at markATcarloan.com.