!UPDATE! Wake up call Canadian dealers
My post last week was about Canadian dealers not being able to finance non prime consumers and how they should consider this market segment in their operations.
Well if that didn’t do it, here’s a very interesting article on how a Nova Scotia dealer does it.
And we, at YulDrive, make it even easier as Lucy can pre-approve your non prime clients in… 16 seconds.
She’s virtually your in-house non prime F&I specialist.
Want to know more? email@example.com
Last week’s post: https://lnkd.in/ds3yNMu
It’s a prime time for nonprime car loans
By employing a strategy that starts in the F&I office instead of the showroom, the group has generated new sales and repeat business, Bingham said.
The strategy has contributed to about 700 nonprime deals in 2018 and at least 800 this year so far, so it definitely works.”
“All our marketing and advertising gears people toward picking their vehicle first, getting emotional, fall-ing in love with that vehicle,” MacPherson said. “It’s like a real estate agent going over to the million-dollar houses when the guy’s like, ‘I don’t know what I can get approved for, I went bankrupt a year ago, and I don’t have a job.’ It doesn’t make any sense.
Bruce Auto Group, which has five rooftops in Nova Scotia, followed MacPherson’s advice and beganusingthisapproach about two years ago.
Nonprime customers are asked how they would rate their credit history, “with 1 being not so good and 5 being perfect,” Bingham said. “If they told us anything below a 5, we would immediately say the best thing for us to do is [talk to] one of our credit specialists.
“It was very simple. We haven’t had an objection yet.”
NEW OR USED? IT DEPENDS
The right vehicle can be new or used; it all depends on the customer’s credit history, Bingham said.
“We take a look at the credit and the approval and work with the customer to select what fits their needs,” he said. “Many franchise stores have excellent subvented subprime rates, such as Mazda, Kia, Hyundai and General Motors.
“A client may qualify for 10 to 15 per cent on preowned, but there may be a new-vehicle subprime program that gets that same customer a 5.99 per cent rate on new. It’s case by case, really.”
While dictating what cars a consumer can buy might feel counterintuitive, it’s the key to his system’s success, Bingham said.
“We can’t let the customer select the car because they’ll never select the right one,” he said. “You have to say: ‘Listen, we’re going to put you into a vehicle. It may not be what you want. It may not be the payment you want, definitely not the interest rate you want, but this is the step to get you where you want to be.
‘We’re going to do this fo 12 months, and we’re going to take a look at your credit profile again. We’ll try to save you as much interest a possible by upgrading into your next vehicle.”
Some buyers, he said, have gone from a 29.99-per-cent rate to 8.99 per cent in as little as 12 payments.
“Those people are ecstatic because even if they’re carrying forward $4,000 in negative equity, the spread there in payment that you can work with gets them into a much better vehicle and better interest rate.”
SOLUTION-DRIVEN STAFF NEEDED
Dealership staff who are empathetic and motivated by helping others are the most likely to be successful nonprime managers, MacPherson said.
“Identify that salesperson that really gets the concept of listening to the customer’s problems, having empathy and being able to come up with solutions, ha good paperwork and is great at sales,” sh said. “When given the authority in that position, they just skyrocket. It’s amazing.”
Bingham said that if the process is well managed, customers successfully upgrade out of lower-cost vehicles after 12 months, allowing cars to return to the store’s inventory and begin the same pr cess for another customer.
“You’re basically just recycling your inventory,” he said. “You’ve got to have a good supply of those cheaper cars because that’s where you need to start.
“If you jam them in [to an expensive vehicle] the first time they have too much negative equity, and you can’t refinance
them in 12 months. But if you set your strategy up properly, I’ve got it timed out to about three transactions for five years.”