Subprime customers are a great segment of the market with the potential to make you a serious profit, and yet not all dealerships succeed in building the word of mouth needed to become successful subprime sellers. Understanding these credit-challenged customers is important because if you don't know their needs, you won't be able to meet them. So, what makes these customers unique, and how do they tick? We offer some insights to understanding these special buyers.
Emotions Run High
By the time most subprime customers walk through your doors, they'll likely have experienced many rejections because of their poor credit situation and are discouraged. While it's common courtesy to treat everyone with respect, a person who's embarrassed by their situation is especially grateful to be treated for what they really are: a potential customer.
You're the customer’s guide through this process, and it's your responsibility to educate them on what they need, and what to expect. You should be preparing them for the requirements of a subprime loan, because nothing will anger someone quicker than surprise terms being placed upon them.
Set-up Reasonable Expectations
For a subprime customer, it's important during the interview to collect all the information you can, in particular why they have bad credit. Is it someone with habitual bad credit, or someone that has fallen on hard times due to illness or job loss with situational bad credit? Present all this information promptly to the lender, not after the application has been denied.
The terms for subprime loans aren't as favorable as those of a prime candidate, so alert the customer to expect a higher interest rate so they do not have a nasty shock later. If they've been approved, focus the person's attention on the positive, 'they have been approved'. It's a great thing, and it gives them a chance to rehabilitate their credit with the option of refinancing at a later time. A down payment of 10-20 percent may also be necessary and can seem like a lot for the customer, but don't forget, it means they were approved! The co-buyer/cosigner route should also be explored if terms are still too unfavorable.
Word of Mouth
Regardless of how hard you work, not all people will qualify for a subprime loan. It's critical that you leave a last impression that is positive and respectful. Subprime customers are some of the most loyal in the industry, and it's simply human nature to remember a company that was there for them at their worst. These customers are also the best form of advertisement to family and friends.
If you're ready to enter the world of profitable and loyal customers, contact Auto Credit Express today for more information. We're a leading special finance leads provider with other great dealer products and services that can help boost your bottom line. Give us a call at 888-535-2277 or fill out our contact form today to learn more.