How to Get Started With Non-prime

The problem? Figuring out a way to successfully integrate non-prime into a traditional sales process. You don’t want to just hire a lone gun that will create liability faster than revenue and you don’t really want sales staff talking about credit. It’s a problem. 

Beyond that, it’s not really just non-prime. It’s a whole segment of the population that live on the credit spectrum world below prime, and another segment who just doesn't know about their credit, or has anxiety about committing to a vehicle then getting turned down. Either way, it’s an opportunity and if you're not there, you’re missing out. 

Let’s examine some of the major obstacles to integrating non-prime into your dealership. 

The first one, the biggest, is the traditional sales process. 

The customer works with a salesperson to select a vehicle. Then negotiation takes place, and once that is complete it’s time for the Finance Office. The assumption all the way along? Good credit. In this scenario by the time someone with credit issues gets to the finance office they are likely on a car they don’t qualify for. Now, even if your Finance Manager knows a thing or two about non-prime, you are in for an uphill battle trying to explain to your client why they have to pay $100 more a month for a much less vehicle. In non-prime, the financing is a pre-approval that comes before vehicle selection.

Another obstacle? It’s complicated financing. 

When working with traditional finance clients at your dealership it’s pretty straightforward. The rate is whatever is posted by the bank. Advances for vehicles are not typically an issue. In most stores, the Finance Manager position is a sales position. Most who ascend to it do so directly from sales. In most traditional car dealerships, when you’re seeking out a Finance Manager, I’m pretty sure the big question is “what’s your average per unit?”, not “Can you do finance?” A well trained fourth grader can do automotive prime finance. Sorry, but that’s the reality. Not exactly brain surgery. Non-prime, not so much. Clients exist on a spectrum. From just above prime rate to well over 20% and beyond. Establishing where they are on that spectrum is the first challenge. Beyond that a whole host of other complications. Non-prime programs rely heavily on the vehicle value and model year for term and advance. Now you're into math! Rate. Book value. Year. Term of the loan. Customer budget. Never mind all the extra income requirements and stips. Yep, non-prime can be complicated. You find that out the first time your Finance Manager takes a run at it and you wait a month to get funded. 

One more giant obstacle. While new cars can be a valuable element of a successful push into non-prime, it is primarily a used car business. 

Any significant non-prime automotive business has at its core, a strong used car element. And a ton of new car dealers don’t love used cars. For a ton of reasons. A change in the process. It’s complicated. Used cars. Ugg. Is it worth it? Yes. It’s worth it. Because you don’t have to decide now whether you're going to dive right into the deep end of the pool. You can just wade in a bit at a time starting with making a non-prime, or a “special finance” process available in your store. It really is as simple as offering a pre-approval service in your dealership and allowing your sales staff to offer it up. Diverting clients into the business office before selecting a vehicle, to find out what they qualify for. Yes, there is training required. Yes, it will take a while for your staff to figure it out. But really, you can start for free by just making pre-approved financing a service offering on your site, and in your existing marketing, then empowering and training your staff to deal with enquiries that come in. A new source of very lucrative deals with little or no investment. 

If you start today, I guarantee six months from now you will be generating profitable increment business and trying to figure out how to generate more special finance leads. Even your sales staff will be on board. Guaranteed.