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Jared Hamilton
From: Jared Hamilton
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Dennis Galbraith

Dennis Galbraith Chief Marketing Officer

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Financing to Sell Cars or Cars to Sell Financing

 

Most of the posts on DrivingSales.com are for or from dealerships who sell cars and offer financing as a means to help do it.  However, thousands of stores exist for the primary purpose of financing.  Stocking vehicles is necessary to help them make loans.  It's a different approach to the business, but one that cannot be ignored.  Ours is a country where millions of people rise up from the depths of hardship to live wonderful, secure lives.  Even if you are selling Lexus or BMWs, chances are someone came into your store this week whose perception of car dealers is still impacted by an experience years ago when they were desperate to obtain financing.  It may have been positive or extremely negative.

Many stores offering credit to challenged buyers perform a very necessary service. Eighty-seven percent of the workforce drives to work in a car or truck. If everyone driving a buy-here-pay-here car suddenly couldn't get to work today, the national economy would collapse. Tens of thousands of people regard their car dealer as the best business friend they have in the community. Gone are the days when people get credit at the grocery store, and most community banks are gone, but a car dealer made it possible for them to keep driving to work despite their credit problems.

Prior to the financial collapse of 2008, many stores specialized in sub-prime financing. A number of lending institutions were happy to offer auto financing to consumers with sub-prime credit, and do so through auto dealers. Some of these stores were independent dealerships and some were franchised dealers, but that market dried up fast, and it wiped out a lot of stores that were unable to adjust quickly enough.

Now sub-prime lending is coming back. In August, Experian reported that 40.8% of auto loans were to sub-prime borrowers. The availability of sub-prime financing is rebounding faster for autos than it is for mortgages, and it will again produce some strange promotional tactics.

Here is a website with scanned sheets of inventory and no address for a physical store, ladinstore.com. It may seem ironic, but this man is positioning himself as the alternative to unscrupulous dealerships. This is a centuries old tactic for con artists. By warning shoppers of the dangers they face working with dealers, the con artist positions him or herself as the trusted alternative.

Know what shoppers are exposed to in your market. The landscape for financing is changing, and a new crop of scam artists is sure to infiltrate our industry in your community. Know what they are saying, and consider how you will position your store in your local market. How might you appeal to a vast audience of credit-challenged shoppers without looking and sounding like the lending predators who are sure to rise up in ever-greater numbers? 

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