The world of special or subprime finance can be confusing. That’s because the process is the reverse of what goes on in the prime world.
In the prime world, you sell the car and arrange financing; in the special finance world, you check the customer’s finances first then pick the car that’s right for them.
But dealers and business manager can’t afford to be confused, warns Jim Dyas, regional director and sales manager for ScotiaDealer Advantage (SDA).
“Special finance occupies 41 per cent of the marketplace. And it’s growing on this rocky economic road we’re on. Therefore, it’s an important thing to understand.”
Dyas says SDA can help dealers and business managers make sense of special finance. How? First of all, because special finance is unique, the finance company offers dealers a special finance business plan.
It offers advice on topics such as how to attract special finance customers with marketing advice about the right kind of advertising.
The plan then answers the next question: “Given that the sales process is the reverse of prime, how will your staff deal with them when they walk into the showroom?”
The special finance customer’s financial situation dictates a different process, he says, and all staff members must appreciate it and be part of it.
“We will work with all the key participants at the dealership to understand it and contribute to it,” he says.
Inventory management is key. Stocking the rights cars is important. SDA has programs designed to support new as well as used vehicles.
“We will lend on vehicles up to 10 years old. Some vehicles are better fits,” Dyas says.
“A few kilometres can mean a lot when it comes to booking the deal with us.”
He says SDA area sales managers will show dealership staff which vehicles are right for the finance company’s lending program.
Training is a big part of the puzzle, he says, so SDA offers staff training.
First of all, SDA staff helps business managers understand that a prime rate deal may not be the best deal. There are other options.
“The business manager may even have an approval from a prime source, yet it may have a fair number of conditions attached to it – down payment, co-signers. At slightly higher rates, we may be able to offer terms that will help the business manger close the deal,” he explains.
Business managers can expect to see more prime deals with conditions attached.
“It’s not that credit has tightened, but more and more, prime lenders are following their procedures to the letter,” he says.
Look for that trend to continue, creating an ever-growing near-prime market and customers, whose needs the business manager must meet.
Then there’s training on topics such as how to structure a deal and how best to close it. There are a lot of variables that go into a special finance deal – the rate, the payment call, the amount we are willing to lend, selecting a different vehicle, he says.
SDA teaches the business managers how to navigate a deal and helps when needed: “We offer a new set of eyes looking at the deal.”
The lender offers participating dealers a scorecard that gives them a rundown on the number of applications they’ve submitted, how their apps have scored, approval levels and the like.
The cost? SDA doesn’t charge for any service or support. And there’s no requirement that the dealer deal exclusively with the lender.
The lender’s area sales managers are there to help dealers succeed in the world of special finance, he says, whether it’s the business manager who has the occasional near-prime deal come cross their desk or the dealership with a focus on special finance.
“It’s a partnership with the dealer and the business manager. We consult with them on a number of levels and work on individual deals to help them turn prospects into customers,” Dyas says.
For more information, contact the ScotiaDealer Advantage regional sales manager – Jim Dyas, Central Canada, jim.dyas@ScotiaDealerAdvantage, Alain Legare, Eastern Canada, alain.legare@ ScotiaDealerAdvantage and Darren Kiley, Western Canada, darren.kiley@ ScotiaDealerAdvantage.