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Two Axioms Serve As Special Finance Department Foundation

While many things continually change in the retail automobile industry change, some things do stay the same. Certainly, that is true for the Special Finance market. While finance companies ebb and flow, new marketing ideas appear on the horizon, and certainly more and more dealers enter the niche, two key axioms have stayed the course since I first entered into the field more than 16 years ago and have remained the foundation of successful Special Finance departments. It is vital to keep these two premises in focus as you prepare the action plan to grow your department or dealership. They will not only help you deliver more vehicles, but do so with more combined front and rear gross profit.
Axiom number one: Unlike conventional retail deals, in Special Finance, you are selling the ability to arrange financing for the customer, not necessarily selling the vehicle.
Yes, you are selling the dream as much as the vehicle. The Special Finance customer approaches any dealership with trepidation, always harboring the thought, “Will I be approved?” Certainly with more dealers becoming actively involved in Special Finance by using the Eight Essential Elements, there is more competition for the customer. As a result, yes, you still must be able to sell the vehicles, but the customer’s underlying thoughts are of wanting to be able to hear that they can actually finance a vehicle.

Axiom number two: To be effective with the Special Finance customer, you must be adept at helping them re-select vehicles.

To many, it seems that the Special Finance customer always has champagne taste, but with a beer budget. To be fair, it really isn’t their fault. Consider the enormous number of ads in the media, especially from the manufacturers themselves, offering (as an example) $20,000+ vehicles for $239 per month. To be sure, it is a lease, usually with a significant cap cost reduction, but the customers never see the fine print. They see a desirable vehicle, at a monthly payment they know they can afford, which leads them to you. Of course, it is most often always the wrong vehicle to be able to structure an affordable Special Finance deal with.

Why else are these two axioms so important? I drift back to the Special Finance sales process, which is botched at more dealerships that not. Remember the psychology behind the sale. Special Finance customers arriving at the dealership, whether or not they were identified in advance as sub prime credit, are approaching the sales team with concern. They are generally embarrassed to have to discuss their credit history. What happens is that after the meet the sales person, the customer’s talk-track defaults to the safest subject to discuss – the subject the sales person has brought up – “What kind of car, truck, van or SUV are you interested in?”

Where does that lead to? It generally has a customer looking at vehicles while, at the same time, harboring uneasy feelings that they won’t ever be approved. They feel like they are wasting time, they feel like they will wind up being embarrassed, and simultaneously, they feel they are locked in this type of death-spiral. All the while, the sales person has no clue. If the sales person will quickly ask some non-offending qualifying questions at the onset, it will both put the customer at ease, and facilitate the ability to help the customer obtain financing.

Moving to the second axiom, why is the ability to re-select so important? From the previous point, certainly many customers have already been steered to the wrong vehicle before being identified as sub prime credit customers. Just as importantly, many customers when arriving at the dealership have no concept of what their budget and financial constraints will allow them to buy. Many people have a hard time grasping that $30,000 financed over 60 months – with no interest – is still $500 per month. Those individuals may be insistent at looking at a vehicle they can never qualify for. So what do you do?

My suggestion, unless they have found the dealer’s personal S500 out back, is that you let the customer drive the vehicle they insist on looking at. I couldn’t begin to count the number of people that came in looking for extended-cab, four-wheel drive pickups only to leave in Grand Ams or Elantras. How? Certainly, it was not by force. If they were insistent on driving something that would not budget, we would let them drive it, then four-square the deal on that vehicle. We would never say “No,” but would instead let them disqualify themselves after we told them we had them approved (for example) for $15,000 financing, and then asked them for the necessary $12,000 down. At that point, we hadn’t told them they could not have the vehicle of their choice, we simply told them what we could finance, and that we would need them to make up the difference with their down payment.

Generally this approach allows the sales desk or Special Finance manager to both determine exactly how much down payment the customer does have, as well as give them the ability to suggest alternative vehicles that the customer will qualify for based on their income and down payment. Also remember, they are likely driving an eight to ten year old vehicle that may well be on its last leg. All in all it is much more effective than just saying “No.”

Using these two axioms will allow you to help put your customer at ease, help them select the correct vehicle, and, most of all, be more satisfied. We all know that with satisfied customers we sell more cars and at higher gross profits.

To be certain, there are many factors to keep in mind in the road to the sale, but over the years, these two axioms have always rung true and have been the foundation for successful Special Finance departments all across the country.

Vol 3, Issue 1



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