Tips for Auto Dealers Working with First-Time Buyers
Young buyers represent significant risks and opportunity for dealerships. Their life situations and limited credit history calls for some fresh approaches. Here are 4 tips for dealers looking to work more effectively with first-time buyers.
1. Understand your non-prime financing programs
Shot-gunning applications to every lender can result in a number of declines and adverse action letters — turnoffs to first-time buyers. Make sure you understand the non-prime financing programs that are available to first-time buyers, so you can target applications to lenders likely to approve these buyers. You need to be able to match up thin-file consumers with the lenders that cater to their risk segment.
2. Make sure buyers understand the process up front
Inexperienced buyers may pick a car and become emotionally attached to it. Then, they are confronted with a loan process that often leads to frustration if the buyer can’t afford the vehicle. It’s better to be consultative upfront on what the buyer can realistically afford. Be aware of impending changes in a young buyer’s lifestyle. Typically buyers in their 30s and 40s don’t change their vehicle needs as often as someone going from college to job, to marriage, to raising a family during their 20s. The more questions you ask about the buyer’s needs and financial challenges, the smoother the entire process will go.
3. Collect accurate information
Collecting accurate information from the buyer — things like job tenure, employer contact information, income and work/home address — will keep financing moving at a steady pace. Most non-prime lenders require some level of income and employment verification. Incomplete information slows down the funding process. Don’t accept incomplete or incorrect information from the applicant. Ensure you’ve collected all the information needed to make a sound credit decision.
4. Learn about new tools
There are new tools to help you quickly assess the demographic and predicted financial situation of prospects walking your showroom floor. New marketing tools help you assess the estimated financial capacity of consumers, and even the make/model of cars they are likely to prefer. You can also remove certain lender conditions by using 3rd party verified income and employment data. There are plenty of new tools developed for dealers to speed up the sales and funding process.
For more information about Equifax solutions for Automotive, please visit www.equifax.com/automotive.
Image source: Big Stock
Recommended For You
Buy Now, Pay Later FinTechs are Well-Positioned to Drive Holiday Sales in 2020 Buy now, pay later FinTechs are well-positioned […]
This is part 1 of a 3-part series Accelerating Growth in the FinTech Space While the COVID-19 pandemic is upending […]
The last six months have been a wild ride for auto marketers – auto loan marketers included. After coming to […]
BHPH Lenders Need Alternative View of Customers’ Ability to Pay It’s paramount to keep sales moving during this time, not […]