BLOG FOR SPECIAL FINANCE CAR DEALERS
Subprime car loans
When people talk about sub prime loans, most think of home loans, but sub prime loans reach beyond the housing market. There are millions of borrowers that have less than perfect credit. Sub prime loans have increased by 13% in the third quarter of 2010.
According to a news release from Experian; car loan delinquencies fell in the first quarter of 2010, for the first time in three years. Default rates have dropped by 28% from the previous year; meaning that banks are feeling more confident in lending to more sub prime customers. The banks also have more money to lend so they are more willing to take risks and lend to people with less than perfect credit.
This is good news for us at Auto Credit Express because we have been working with people that have bad credit and subprime car loans for over 20 years. Since the credit crisis millions of people who used to have good credit now fall under the sub prime category. Even though this is a discouraging look at the current economic situation, it is encouraging for the sub prime market.
Reasons that your car dealership may not be getting more sub prime car loans:
- You’re not working with ACE
- These motivated buyers are going with the first person who calls
- Sales people are not working the special finance leads quickly and diligently enough
- Customers are discouraged with having to provide more information than they are used to
- Special Finance Managers are unwilling to change with the times and are complacent with their current status quo
- Dealerships have never worked with sub prime customers before
- Not knowing that the sub prime market accounts for more than a third of all auto loans and is increasing every month
- Managers feel that old school advertising is enough and don’t realize that they could improve their sales by 5-10 deals a month
Reasons to jump into sub prime:
- Increase traffic; extra 20-40 ups
- Increase sales; extra 5-10 deals
- Increase gross; extra $12,000 to $22,000 a month
Sub prime is on the rise and which creates new profit avenues for smart car dealers. These motivated subprime car buyers are in need of automobiles and only need to be educated on their current situation and what they can do to improve. An auto loan for bad credit is the right path to take to improve their current credit situation. Be the one that helps to improve our national economic crisis and don’t be the one that is on the sideline watching everyone pass you by.
Comments (1)
November 28th, 2011 at 11:33 am
So true, educating buyers can go a long way in helping them, as well as establishing credibility as a dealer.