John Palmer – Become Great at SubPrime – It’s over 40% of the Market!

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Learn the Lenders, Inventory, Marketing and Sales Process Your Store Needs To Maximize its Profit Potential with this Huge And Growing Market!

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John Palmer – Become Great at SubPrime – It’s over 40% of the Market!

  1. 1. Become Great At Subprime It’s Over 40% of the Market! Learn the Lenders, Inventory, Marketing and Sales Process Your Store Needs To Maximize its Profit Potential with this Huge And Growing Market! John Palmer, President & CEO ProMax Unlimited & ProCredit Express Pages: 56
  2. 2. Special Finance is 42% of the market! FICO Credit Scores % of population Credit Score 2% 300-499 10% 500-549 8% 550-599 22% 600-649 10% 650-699 18% 700-749 17% 750-799 13% 800-850 Source: National Credit Reporting Agency
  3. 3. Lending was up dramatically across the board for 2012 27 billion increase Over 41 percent of Americans are in need of subprime financing options, and according to A. T. Kearney’s 15th Annual Automotive Study, the economic downturn of 2008-2009 resulted in an additional 15 million Americans being classified as subprime.
  4. 4. “A huge consideration in the sales and marketing strategy for retail automobile dealerships should be the resurgence of subprime.” Jim Ziegler F&I Showroom Sept. 2013
  5. 5. You already have more subprime customers coming in your store than you think. Start keeping track of how many and how well you are doing with them.
  6. 6. How do you turn Special Finance Prospects into Customers?
  7. 7. To be successful in Special Finance a dealership needs: • The right mix of lenders • The correct inventory • Marketing tools to generate leads without detracting from stores image • A blended sales process that maximizes every opportunity
  8. 8. First - Select the right mix of Lenders
  9. 9. Lenders for the lower tier customer Exeter Finance Corp http://www.exeterfinance.com/CustomersContactUs.aspx Westlake Financial http://www.westlakefinancial.com/Pages/LoanCustomersFAQ.aspx Drive Financial http://www.santanderconsumerusa.com/about/contact_us.aspx CAC http://www.creditacceptance.com/content2.aspx?page=2&subpage=3 Regional Credit Corp http://www.regionalacceptance.com/default.cfm?fuseaction=home&CFID=3114650&CFT OKEN=71963133 Flagship Credit Corp http://www.flagshipcreditcorp.com/contact_us.html Globe Acceptance Corp http://www.creditreportproblems.com/Global_Acceptance_Credit_Company.htm United Auto Credit Corp http://www.upfc.com/makePayment.asp Honor Finance http://www.honorfinance.com/
  10. 10. Lenders specializing in bankruptcy Tidewater Motor Credithttp://www.tidewatercredit.com/ Prestige Finance http://www.gopfs.com/ Friendly Finance http://www.friendlyfinance.ca/ CPS http://www.consumerportfolio.com/
  11. 11. Full sub-prime spectrum lenders AmeriCredit GM Financial http://www.americredit.com/contact_us_global.asp Capitol One http://www.capitalone.com/autoloans/ Chase custom finance https://www.chase.com/index.jsp?pg_name=ccpmapp/shared/assets/page/phone2 Wachovia https://www.wachovia.com/contact Fireside Bank http://www.firesidebank.com/Dealers.aspx Citizens http://answers.yahoo.com/question/index?qid=20090307205154AAtnjcs Santander Auto Finance http://www.santanderconsumerusa.com/dealers/dealer_contact.aspx Security Auto Loans http://www.securityal.com/sal/dealer/SALHome.php Citi financial http://www.citifinancial.com/USCFA/CFA/portal/Home.do First Financial Investors https://www.fifsg.com/Contact_Us.aspx
  12. 12. Next - Make sure you have the correct inventory. What works best for the prime side of your business may be just the opposite of what you need to be successful in Special Finance. 50% of the gross on Special Finance deals is based on the “Spread” the other 50% on how you work the deal.
  13. 13. First analyze your current inventory for Special Finance opportunities (This actual dealer needs some good SF vehicles!)
  14. 14. If your current inventory analysis shows you need vehicles – Go to the auction with a list of vehicles to buy for your Special Finance customers
  15. 15. Here are some great Special Finance vehicles for your Special Finance customer
  16. 16. While most dealers have inventory automatically posted online, there is nothing that states or requires you to post your entire inventory. If you buy inventory specifically for your Special Finance prospects, you can simply leave those vehicles off the Internet, so that you don’t get locked into unworkable deals structures. Of course you can sell those vehicles to regular retail customers, but most dealers will see little benefit in pricing every Chevrolet Impala with prime credit pricing models.
  17. 17. Marketing and advertising tools to generate leads without detracting from your stores image. • • • • • • Your dealership website A special finance micro site Trigger leads Fresh BK leads both open and discharged References and referrals Prior unfinanceable showroom traffic
  18. 18. 1 Optimize Your Website to Get More and Better Credit Leads
  19. 19. Suggested plug-in images!
  20. 20. Place the credit offer on your Inventory Results and Vehicle Detail pages to provide maximum exposure.
  21. 21. Advertise a separate website specifically for your 2 Subprime customer
  22. 22. 3 Trigger Leads Do you want to know who applied for an auto loan YESTERDAY within 30 miles of your dealership with a credit score between 500639? How it works: When a dealership, finance company, credit union or bank pulls a TransUnion, Equifax, or Experian credit bureau on a consumer the bureau is flagged with an auto inquiry. If the consumer falls within the radius and CB score range you have selected then your dealership will be given the name, address and phone number (usually about 30% have phone numbers after scrubbed against the do-not-call list). The next day a letter will be mailed with an offer of credit backed by a lender of permissible purpose. Average response rates vary between 5% and 10 %.
  23. 23. 4 Fresh BK leads both open and discharged. Bankruptcy levels still over 1 million filings in 2012 and expected to rise in 2013 Judge Julia Gibbons, chair of the budget committee of the Judicial Conference of the United States, which oversees the federal court system, told a Congressional committee earlier this year that court administrators expect bankruptcy filing to increase by 8 percent or more in 2013.
  24. 24. 5 References & Referrals People with Special Finance needs usually have friends with Special Finance needs – Birds of a feather, do indeed flock together. Most people with really bad credit just assume a new car dealer can’t help them and think BHPH is the only answer – This is a totally wrong assumption.
  25. 25. Send out a letter to every reference on your Special Finance customer’s credit application letting them know they were a reference and that you offer credit for any situation – perfectly legal. “One dealer I know sells 10 cars a month this way with less than $500 a month in ad costs!”  On every outbound and inbound call that is Special Finance oriented ask for 2 references at the end of the call – with training and skill, salespeople will average one per call.
  26. 26. 6 Prior Unfinanceable Showroom Traffic You’ve spent thousands and thousands of dollars getting prospects into your showroom over the last few months that you could not get financed.
  27. 27. Send out an email every 2-3 months to your credit challenged prospects.
  28. 28. A blended sales process that maximizes every opportunity • • • • No separate SF department Qualify prospect early Work the deal backwards Give customer a choice of 3-4 vehicles • Close the selected vehicle with alternate choice close
  29. 29. Qualify all showroom traffic easily Two Types: 1. 2. Appointments from SF marketing efforts Walk-in Traffic
  30. 30. Appointments - Take appointments directly to office and fill out a complete credit application. Explain to customer you and your manager will pick out 3 vehicles for them to choose from that will fit their needs and help re-establish their credit. Walk-in traffic – Much bigger than you think Analysis CB scores pulled in the last month.
  31. 31. Qualify in one of two way: 1.Qualifying questions such as “Do you intend to finance, lease or pay cash for your next vehicle?” “On a scale of 1-5 with 5 being great, how would you rate your credit?” “Who are you currently making payment to?” “Who was your last car financed through?” “Are you here to take advantage of 0% APR financing for customers with preferred credit?” 2. Use a credit prescreen tool integrated into your CRM for automated qualifying.
  32. 32. If customer fits Special Finance criteria take to office to fill out complete application and see manager to come back with a selection of 3 vehicles. Never let a Special Finance customer pick out their own car!
  33. 33. Work the deal backwards A manager needs to review the credit application and credit bureau to get an idea of available lenders. He can then choose the top grossing combinations of vehicles and lenders and select 3 vehicles which the salesperson can show the prospect. This can be done manually with an inventory list or with available software programs.
  34. 34. Give your customer a choice of 3 to 4 vehicles
  35. 35. Close the selected vehicle with an Alternate Choice close. Never give any customer an option of one choice – but always 3 Here is an example of a good alternate choice worksheet.
  36. 36. Become Great At Subprime It’s Over 40% of the Market! John Palmer, President & CEO ProMax Unlimited & ProCredit Express If you have any questions, comments or need help with Special Finance? You can contact me directly at: (800) 322-9034 ext. 103 Cell: 309-269-1247 or email: ceo@promaxunlimited.com For more information visit our site at: www.promaxunlimited.com

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