Understanding the Credit-Challenged Market

The automotive industry is changing.  Profit margins are narrowing as the marketplace becomes increasingly competitive – and complex.   For the consumer, this is the golden age of choices – not only in the myriad of products that have flooded the market – but in financing options, and the companies that offer them. For the dealer, this is a time when even a slight competitive edge can mean significant profits.  In an effort to gain such an edge, dealers have embraced the opportunity to serve the non-prime market. Dealers have finally recognized that appealing to this growing segment of the population offers huge dividends, both financially and philosophically.

An increasingly large percentage of consumers are currently in an economic position to finance a vehicle, but may have suffered credit setbacks for one reason or another. These customers are often excellent car-buying candidates, but remain haunted by the ghosts of their financial past. It would be in the dealers’ best interests to capture this enormous market, for a variety of reasons. Dealers who find a better way to capitalize on this opportunity – changing their procedures to address their customers’ needs – will not only remain ahead of their competition, they will pave the way for improved customer rights.

A compassionate approach to the credit-challenged customer can pay off in many ways:

• Converting a massive consumer market into profitability.
• Increasing responsiveness to a disparate customer base.
• Protecting consumer investments through additional product sales.
• Building dealership loyalty through repeat and referral business.

Excellent credit gives the consumer the upper-hand during the negotiation process. A car buyer with outstanding credit can command better interest rates, and generally place greater demands as conditions for the sale.

The balance of power shifts dramatically to the dealership when dealing with a customer possessing lackluster credit. That customer’s credit options may be limited, but his choice of dealerships is not. In many cases, the nonprime customer feels fortunate just to be able to purchase a new or used vehicle.  Any dealership which can address the customers’ needs respectfully will breed intense customer loyalty. These customers will eagerly tell their inner circles how the dealership was able to help them when no other store would. They’ll want to come back themselves when they are in a better position to upgrade their vehicles.

Best of all, As long as deals are structured properly, stipulations are collected and the paperwork process is in order, dealerships can prosper beyond prime.