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Amy Taggart

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Working Special Finance – what is "Special Finance" anyway?

All right, time for a new topic since I recapped best practices in consumer privacy compliance last time out.

We spend a lot of time talking about this particular one, since we offer special finance leads to the members of the Carloan.com Dealer Network. But let's take a step back and introduce this phrase to people who may not know what it means.

When you say "special finance" to an auto dealer, it has a really specific connotation. There are dealers who flat-out say that they don't do Special Finance, a term that people throw around interchangeably with "subprime."

That last bit might explain some things to the newbies.

Generally speaking, consumers who fall into the Special Finance category for a dealer are people in that subprime credit tier, which means that their credit scores are around 650 or below.

What that also means is that a lot of banks were too scared to lend to those kinds of customers for the past several years, something that is changing right now.

The "special" in Special Finance really is short for "specialized" -- these deals take a little more work with a bank to get done, and there is an entire industry that has grown up around supporting the back end of that process. So much so that there's even an Industry Summit we'll be exhibiting at in September (booth #508) and a magazine devoted to the topic.

Those dealers that work with Special Finance customers  -- and are successful at it -- have dedicated departments that are responsible for maintaining a process, culling the right inventory, wooing the right mix of lenders and getting cars sold.

And there's money in them thar deals. Big money for those that do it right.

The good news is that we're seeing a major comeback in this sector of the automotive financing market. Just check out our Volume Estimator to see how the consumers feel about it, too -- they're also getting back into the market.

Next time, we'll take a closer look at what makes Special Finance different from other kinds of auto financing.

Jeremy Alicandri
Given the resource investment you describe, Why do you feel that special finance deals yield higher profits than typical deals?

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