Q: What impact will the Cash for Clunkers law have on the SF or BHPH

industry?

The dealerships currently doing a good job in the special finance segment will use this as another bullet in their gun and find a way to make it work, while the dealerships that aren't doing a good job in the special finance segment will continue to make excuses.

There are still a lot of dealers out there who do not know how to put a special finance deal together, so I’m not sure the $4,500 will help them because they still have to get the deal bought and we don't know how the banks are going to treat this new found down payment.

I haven't talked to any of the finance companies about this yet, but my best guess is that they are either going to treat this like they do a manufacturer’s rebate or they will cut the LTV way back on these deals because they know the customer isn't coming out-of-pocket for the cash and the risk is still there.

It looks like the consumer is going to have to buy a new vehicle and fit all the criteria to get the full $4,500. This could help dealers move a few extra new vehicles per month, but in the special finance world the same issues will continue to surface.

The sad part is that most dealers do not have anyone at their dealership who knows how to handle the special finance customer from start to finish, so they will lose car deals, gross profit and loyal service customers.

You must have people at your dealership who are trained to handle special finance customers and know how to structure a special finance car deal or this program will not work as well as it could.

Special finance is a rapidly growing segment of the auto industry, and most dealers across the country are seeing more customers with credit issues on their showroom floors with nobody qualified to help them. If you don't have a qualified special finance department to handle this huge portion of the business, these customers will be walking out the door and buying from someone else.

Vol. 3, Issue 4