BLOG FOR SPECIAL FINANCE CAR DEALERS
The RAW Principle in Action at the Car Dealership
Is your car dealerships are Ready, Able, and Willing to sell a car to every customer that walks in the door?
Believe it or not, many stores are not WILLING to sell cars to people with bad credit. At Auto Credit Express we speak with car dealership personnel everyday; a good amount of time we hear phrases from store management like “We don’t deal with those kinds of people”.
We just returned from the NADA convention and expo in Orlando and we heard the same thing there. As dealership personnel passed by our booth we would ask, “Can we help you sell more cars to people with bad credit”? More often than not franchised dealership personnel were not WILLING to invite this segment that makes up nearly 50% of the car buying public into their store.
For those that are willing to facilitate bad credit car loans and help people with bad credit buy cars, many are not ABLE. Some of these stores do not have the lending resources and inventory in place to hand a wide array of subprime customers.
Car dealerships that are WILLING and ABLE to cater to subprime customers dedicate resources to finding cars specifically for subprime and they have lenders ranging from the well know subprime lenders like Drive Financial, Capital One Auto Finance, Chase Custom Finance, and Americredit, to regional and local lenders like Nicholas Financial and Friendly Finance Corp.
Just because you have the right inventory and a wide array of subprime lenders in place, does not mean you are READY to do subprime. Stores that are READY maintain vehicle valuations on all their inventory with at least two books, west coast stores use KBB and Black Book, whereas central and east cost stores use NADA and Black Book
Stores that book out their cars at the point of sale, utilizing only one book value, are not READY to cater to a subprime customer when they walk in the door.
Different funding sources use different books, which cars on your lot are the best cars to use if you have negative equity and an approval from a lender that bases their advance on Black Book, like GMAC or Chase, and which cars on your lot are the best cars to use if you have an approval from a deep discounting subprime lender that uses NADA values?
Stores that are READY from bell to bell maintain updated values on their entire used car inventory utilizing special finance software programs like LotPro®. Knowing which bank uses which book and the specific values for each unit will go along way to increase your average gross profit.
Think of it like this; would you ever work a new car deal without looking at the invoice? Probably not; invoice, however, does not accurately reflect the vehicles cost. Yet most of the time stores work a used car deal based on the vehicles cost, not the vehicles value.