Secrets of Special Finance

Our Most Successful Dealers Shared Their Five Secrets About Growing Their Special Finance Business.

This information is provided to dealers that have a desire to truly succeed in special finance. As a special finance lead generator for over 20 years, we’ve had the privilege of doing business with some of the most talented people in this space.  Unfortunately, we have also done business with dealers that failed to succeed.

Recently, we interviewed some our most thriving dealer partners and asked them to share with us what makes them successful. It was interesting to hear these industry veterans share not just their process but also their philosophy towards “helping people” with less than perfect credit purchase a car. Here’s what they had to say…

1: What are the most important tools a dealer needs to be successful?

By far the number one response to this question was “people”. To quote a few dealers, “Strong phone person…Right desk person…Right Finance person”. “Separate BDC trained to discuss loan process”. “Great people”. “Special finance person that can sell the passion of the dealership, knows how to read credit and can match a customer’s credit profile to the right lender”. “The right people that understand they need to treat these customers just like any other – with respect and compassion”.

In addition to the “right people” our top dealers stressed the importance of having the right inventory (cars you can own at or behind wholesale of left side book, after RO’s) and an array of sub-prime lenders that cover the entire spectrum of sub-prime credit.

2: What do you feel is the best dealership structure for doing special finance?

The number one response to this question was “setting up a separate department”. Obviously, the number of people and roles in the department is dependent on the number of leads and opportunities the department is given.

The general consensus among the dealers we interviewed was one special finance manager who possesses a keen understanding of lender guidelines and knows how to read credit bureaus, one very strong, very persistent BDC person and one to two sales reps for every 100 to 200 leads per month.

3: How would you structure a compensation plan for the department?

Because back-end products such as service contracts are cancellable and add cost to a deal, most dealers max out the front-end and if there is room for more, will then sell after-market products.  Because of this, it is necessary to pay your key people in the department on the front and back-end of a deal.

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 4: What is your process for working leads?

The absolute number one answer to this question was, “invite everyone in”. In other words, DO NOT PULL CREDIT to pre-qualify. To quote verbatim a comment from a GM of one of our most successful dealers in New Jersey, “running credit ahead of time is the death of the department”.  Another quote “cast a net and bring them all in”. Another from a large Chicago dealer, “invite everyone in; don’t cherry pick”. It should also be noted that all of these dealers were able to sell cars to other family members that came in with the original lead – including times they were not able to get the original lead approved!

Equally important to a successful process is timely and persistent follow-up to every lead – just like a dealer does with other types of leads. To quote another dealer, “these customers expect to be treated like all other customers with fast and superior service”.

5: What do you do, if anything, with the customers you weren’t able to help?

The number one response to this question, “educate the customer”. Tell them what they need to do in order to put themselves in a position to buy a car in the future. Set a time frame to achieve these goals and set a reminder to follow up with them. One dealer said this, “people that aren’t in a position to buy a car today will be eventually. Set yourself up for the long run and lay the groundwork to future sales”.

In addition, ALL the dealers we interviewed asked those that purchased and those that didn’t purchase for referrals – and they got them! In fact, several dealers told me they sell on average 10 to 15 additional cars per month simply off referrals from our leads.

I would like to personally thank the dealers we spoke with for taking the time to share these “best practices” for special finance. I would also caution dealers thinking about getting into the space to be patient with your initial results. Special finance is very profitable when done correctly but it will take 60 to 90 days of lead flow to build a pipeline of customers while at the same time ironing out your wrinkles.

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