It’s time to utilize finance companies you may have forgotten. You know which ones. The finance companies we avoided in past years with the low advance and high fees. Now I am finding myself looking at those old rate sheets from banks I chose not to use when the advances were 120-plus. I have resurrected several finance sources not to mention local credit unions and banks that are not fearful of our troubling credit market.
You have to ask for the money down. You have no choice, and if the customer loves the vehicle, they will jump small mountains. We are trained to show the customer what they want (even if you know it is impossible to do with the finance company). An unrealistic customer will be more flexible with you when you seemingly work to try to satisfy their desire for a certain vehicle. Let the customer hear your conversation with the finance company and that they really are asking for $5,000 down. Typically that customer will try to work with you to find another solution that works for them and the bank (and you too).
Don’t let big fees stop you from doing the deal.I find myself saying, “Can you help me on that $3,000 fee?” What?! A year ago, I would have put that callback in the shredder—not anymore. If your fee is huge and you cannot seem to get any other option with another finance company, don’t sweat it. Pay it, take your profit and go to the next deal. It kills me to do a $1,000 deal on a customer and the bank fee is $2,900, but at least it is a deal. We can go back to the auction and buy that same inventory the very next day and replace it, so roll on.
Find finance companies that will not limit your product sales. Some of the finance companies want back-end products; gap and warranty can actually help everyone in this picture. Capital One is back-end friendly. Chase Custom likes gap. US Bank gives you a payment call for the vehicle, not including products; you can add products to most of their callbacks (just ask). Crescent pays 100 percent of the three points you can hold (with no charge-backs). I count that as front gross. Atlantic Financial allows you to sell specific warranties; they do not want the contract without the warranty.
Use the Internet to find the right inventory. Don’t be afraid to purchase inventory over the Internet. That forum has come a long way today. With condition reports at your fingertips and auction certifications, you can shop until you drop at several auctions at a time, all week long. Manheim is the most progressed in this. Embrace technology; it will help you accomplish more in this case. When I was traveling the auctions three days a week, I might come home with three truckloads and I might come home with three vehicles. With the Internet, your travel time is 10 seconds instead of four hours, and you can be in Indiana, Ohio, Georgia and Florida, all at the same time.
Open bankruptcies are still a real wealth of leads. We have utilized Pacer (https://pacer.login.uscourts.gov/). You can access all bankruptcy filings, records and discharges on this Web site. You can also do a mail merge to send these fresh leads an invitation to do business at your dealership. There are also many providers who can send out mailers to this wealth of potential clients. Be sure if you are using a service that they are mailing letters daily. In my opinion, these fresh filings are like fresh Internet leads: whoever gets to them first usually closes them. You can put a customer in a vehicle the day they file the bankruptcy. Tidewater, 722 Redemption and Friendly Finance are all familiar with this process and will help you make good grosses on these leads.
Leave no stone unturned and work every deal on it’s individual merit.If you have a 400 score, work them in Westlake, Drive, Mid Atlantic or Crescent. If you have a unit in inventory and you can make a profit, let it roll (but don’t give up fresh inventory). Don’t assume these deals do not make money. We have made $3,000 gross profits on Westlake deals. When you trade for a nice piece with high miles, look for a Westlake customer for whom you need a unit. You will be delivering them next. If Drive gives you a $3,000 fee, see if an old-age unit will fit with a minimal profit. If you are not making much gross anyway, why not get rid of an old unit even if your profit is minimal or at a loss? Remember, with Drive, the older the unit, the lower the fee. Drive can transfer fee to rate in those cases, which may work better for everyone.
I hope some of these real-world experiences will help make more deals for you. Don’t give up on special finance; it is still here. I think in the next two years we will reap the rewards again in special finance. Hang in there, and remember, when the going gets tough, the tough get going. SF is an important profit center for the dealership; it has been for years and it will continue to be, so keep on digging. There is gold in those files.
Vol. 2, Issue 6