|It’s no secret that many dealers shy away from Special Finance scenarios, preferring to “broom” credit challenged customers instead of going the extra mile to get the deal bought. Highly successful dealers know that turning their back on Special Finance is bad for business.|
|“The biggest attraction of Special Finance is its profitability,” says Jim Bass, chairman of the National Automotive Finance (NAF) Association, which represents the non-prime auto finance industry. “Gross profits per deal in excess of $3,000 are not unusual, while on new cars the front-end gross is often closer to $1,000.”
The workflow of a Special Finance deal differs fundamentally from a prime deal. The typical prime deal scenario focuses on the vehicle. Most of your time with the customer is spent discussing vehicle features and available options.
In Special Finance scenarios, the spotlight is on financing. Successful deals start by qualifying the customer’s financial situation with a few key questions. The next step is identifying cars on the lot the customer can afford.
Savvy dealers take advantage of profit management tools to match the customer’s maximum monthly payment with all available vehicles, increasing the chances of finding one the customer will want. Through systematic screening, the right software program can quickly show which vehicles match both the customer’s needs and the dealership’s profit goals. These systems should also integrate into the F&I office systems to avoid duplicate entry of information and reduce errors that can result in deals unwinding.
1. Choose a “yes” manager who has a combination of attributes like exceptional relationship skills and a never-say-die attitude. Both are needed to get difficult deals bought, while generating a strong referral and repeat-buyer base.
2. Invest in training, since Special Finance managers are hybrids of sales and finance managers. Also, the subject matter can be difficult to master, since non-prime programs can be more complicated than prime programs.
3. Develop a detailed checklist for the steps required with Special Finance contracts. This will keep financing sources happy, reduce contract delays and get deals funded faster.
4. Beef up your used vehicle inventory to ensure you can give customers a choice of cars for which they qualify. Focus on vehicles with sales prices below $12,000 so the car is affordable and provides adequate gross profits.
5. Invest in technology that allows you to exhaust your inventory and present customers with multiple options while analyzing the profitability of each deal.
Vol 3, Issue 10
Remarketing by Element has joined the NIADA’s network of National Member Benefit partners and will offer prime lane placement, among other benefits, to the dealer association’s members.