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It's Time To Go All In or Get Completely Out!
September’s Subprime Sales Spike 31%
Have you ever noticed that the most successful dealerships in the country have some of the best Subprime Finance departments in the country. That is not a coincidence. If you are a medium sized dealer in a medium sized city how can you grow your business without breaking the bank spending millions of dollars in advertising? You have to change what you are doing and / or how you are doing it and possibly make some changes in personnel. The automotive sales industry is all about People, Processes and Products. In order to be successful you must have the best of all three. Is it easy? No! Is it cheap? You will get what you pay for! Is it hard to do? Not for me, but for you..Probably! But is it impossible? No Way! Then again, if it were super easy everyone would be doing it, Right. Think of it in Fishermen terms - The ocean does not release her bounty without hard work and struggle.
Lets face it, In the world of sub-prime finance, everyone claims to have the secret or trick to creating a successful sub-prime finance department. They tell you that your dealership will make more money than you have ever dreamed of. Fact is, there are very few managers that have any idea what so ever about what it takes to run an efficient Subprime Finance department. Their trick is usually something no one has ever heard of, and even if your sub-prime finance department has numerous other problems, all that any dealership has to do to become successful is obtain the proper training and then follow these two rules.
Rule 1: No Matter What, Do It Right The First Time!
Rule 2: When in doubt refer to rule 1.
Believe it or not, there is a rule that every subprime finance department should be following if they want to earn long-term success, but while it is simple to understand, it seems to be difficult for most to follow. The rule is to take your time and do each deal right the first time. No excuses and no cutting corners. There is no dealer in the country that wants two million dollars on their CIT (Contracts In Transit) list because they need to resign a dozen customers who all live 4 hours away. Everything good in life takes work, including business, and disgruntled customers don’t usually give referrals. Remember that! The only time success comes before work is in the dictionary.
Credit bureau analysts found that subprime auto loans in March came in at $13.1 billion, marking an 8.8-percent increase year-over-year, and it is only expected to grow stronger as the year rolls on. Equifax had to go back to March 2007 to find a figure that high. That’s when the market generated $12.5 billion in subprime paper in a single month. September’s Subprime Used Sales Spike 31% - See more about that HUGE September Here: http://www.autoremarketing.com/subprime/september%E2%80%99s-subprime-used-sales-spike-31
Ask yourself this - What is the most profitable sales department in your dealership? We are talking in terms of Gross Profit Per Unit. If you did not answer with your SubPrime Finance Department then you have some things to work on internally. Your gross profit per unit sold on a SubPrime Finance deal should be substantially higher than a Prime Finance deal. There is a science to this. You must have brilliant minds in every position that know your audience, believe in your brand, follow your process and most importantly know how to take care of your customers before, during and after the sale in order to compete in todays market.
If you are not sure what it takes to get it right, here are a few guidelines. First, every customer needs to feel that you are on their side. You are there to provide them a service for payment. From the minute they walk in the door, they should be treated with respect, and when they start the process of getting approved, explain the entire process to them and make sure they completely understand. Do not leave them waiting for two hours in the waiting area while they are totally in the dark as to what you are doing or even where you are. They will begin to feel abandoned. Stop! And explain the process. Do not condescend to them or treat them with disrespect. As the saying goes, it doesn’t cost anything to be nice.
Second, follow up with past customers. Even if they aren’t looking to trade in their current car or buy another new car for their wife, husband or signifigant other, maybe they are looking for a used car for their teenager, or they have a friend or relative looking for a car, ask for referrals. If you treated them with respect and fully explained the terms of their auto loan, they will remember, especially if you follow up with them. The SubPrime Finance customer should be treated no differently than anyone else. Be a Professional!
Finally, set the proper expectations for the customer with respect, kindness and empathy. It might not be feasible for them to get the car of their dreams today if they have bad credit, a repo, bankruptcy or no credit, but they might be open to a good new or used car if they have been treated with respect and if they fully understand their credit situation. Explain to them that they must learn to crawl before they run a marathon. I highly recommend using the Risked Based Pricing to help explain their credit history completely. If you educate your customer they will appreciate and respect you more in the long term. Happy customers will send you referrals. Good Luck Out There!