Auto Credit Express Blog
March 17, 2008
Subprime Managers – Prepare for Changes in the bad credit market
At Auto Credit Express, we have noticed a number of changes in the bad credit lending arena. Subprime lenders are cutting out many of their smaller dealers and tightening up their credit requirements. How can you, as a special finance manager, prepare for this?
Meet with your lenders.
Have a face to face meeting with all of your subprime lenders. Find out what their plans are and how they might be changing their lending parameters. This will strengthen your relationship and let them know that you want to work with them. It will also bring you up to date with their programs and allow you to make any adjustments that may include changes in income, credit score and stipulations that may be necessary.
This might also be a good time to look around for any new lending sources. Since many of the bigger lenders are tightening their lending policies, now might be a good time to take a second look at some of the smaller lending companies out there.
Adjust your inventory.
With more restrictive lending programs, it becomes even more important to have the correct inventory. It might be a good idea to cut down on the number of sport utility vehicles that you have and begin to increase the number of sedans in the $8,000 - $12,000 NADA/Kelley retail range. You also need to be able to buy vehicles in this price range at or below NADA/Kelley wholesale. After discussing this with a number of special finance managers at dealerships in the Midwest, the following vehicles seem to work well: Ford Taurus, Ford Escape, Dodge Stratus, Dodge Caravan, Chrysler 300 and Dodge Caliber. The Dodge Caliber, especially, offers a decent amount of interior space as well as great gas mileage.
What happens now?
If you’ve been in the car business for any length of time, you know that the current economic situation will eventually change for the better. One thing will not change, though, and that’s the need to stay ahead of the curve. As lenders adjust their programs and buying patterns, it is important to reaffirm your relationships with them. You also need to explore alternative lending sources. At the same time, you also may need to make adjustments to your used car inventory.
How Auto Credit Express can help
Nobody makes a better product for your subprime department than we do. LotProOnline is designed to make your department more efficient and more profitable. Our software allows you to view a snapshot of your used car inventory and see how it matches up against both NADA and Kelley Blue Book values. Our subprime leads, designed around the dealership experience, are the best in the country. For more information on these, as well as our other products, contact us at 888.535.2277 or by using our quick contact form.
